Consider a U$.$S$.-$based company that exports goods to Switzerland. The U$.$S$.$ company expects to recelve payment on a

shipment of goods in three months. Because the payment will be In SwIss francs, the U$.$S$.$ company wants to hedge

against a decline in the value of the SwIss franc over the next three months. The U$.$S$.$ risk$-$free rate is $3$ percent, and the

Swiss risk$-$free rate is $6$ percent. Assume that Interest rates are expected to remain fixed over the next six months. The

current spot rate is $$0\mathrm{.}5979.$

Requlred:

a$.$ Whether the U$.$S$.$ company should use a long or short forward contract to hedge currency risk.

b$.$ Calculate the no$-$arbitrage price at which the U$.$S$.$ company could enter Into a forward contract that expires in three

months.

c$.$ It Is now $30$ days since the U$.$S$.$ company entered Into the forward contract. The spot rate is $$0\mathrm{.}53.$ Interest rates are

the same as before. Calculate the value of the U$.$S$.$ company's forward position.