Consider a U. S. based company that buys goods from Switzerland. The company expects to make a payment for a shipment of goods in 240 days. Since the payment will be in Swiss francs, the U. S. based company wants to hedge against a rise in the value of the Swiss franc over the next 240 days. The U. S. risk free rate is 2% and the Swiss risk free rate is 1.5%, both on a continuously compounded basis. The spot price of the Swiss franc is USD 1.0753 Use the above information to answer this and the next five questions. The arbitrage-free forward price of the 240 day Swiss franc forward contract is closest to: O a. CHF 0.9270 per USD Ob CHF 0.9370 per USD Oc CHF 0.9970 per USD As a consultant for the U. S. company. you are asked to recommend how the company could hedge its foreign exchange risk. You recommend: O a. Selling a forward contract on Swiss francs Ob. Buying a put option on Swiss francs OC. Buying a call option on Swiss francs Suppose that the Swiss franc forward contract's market price in USD is higher than its arbitrage-free price in USD. How would you arbitrage? O a. Buy the forward contract; Borrow U. S. dollars; Convert U. S dollars into Swiss francs at the spot exchange rate, Lend Swiss francs O b. Buy the forward contract; Borrow Swiss francs, Convert Swiss francs into U. S. dollars at the spot exchange rate: Lend U. S. dollars Oc. Sell the forward contract; Borrow U. S. dollars, Convert U. S. dollars into Swiss francs at the spot exchange rate; Lend Swiss francs Suppose that the U. S. based company were to buy a forward contract on 1 million Swiss francs with a forward price of CHF 0.9066 per USD and 240 days to the delivery date. 120 days later, the spot exchange rate is CHF 0.8826 per USD and interest rates are unchanged. Use this information to answer questions this and the next two questions. The new arbitrage-free forward price is closest to O a CHF 0.8812 per USD O b. CHF 0.9012 per USD Oc CHF 0.8712 per USD The value of the long forward position is closest to: 0 a. USD 31,600 Ob -USD 31,600 . -USD 32.600 On the delivery date, the spot exchange rate is CHF 0.9000 per USD Which of the following is correct? O a. The counterparty to the U.S. company would experience a gain of USD 8,100 on its forward position Ob. The counterparty to the U. S. company would experience a loss of USD 8,100 on its forward position . The counterparty to the U. S. company would experience neither a gain nor a loss on its forward position Consider a U. S. based company that buys goods from Switzerland. The company expects to make a payment for a shipment of goods in 240 days. Since the payment will be in Swiss francs, the U. S. based company wants to hedge against a rise in the value of the Swiss franc over the next 240 days. The U. S. risk free rate is 2% and the Swiss risk free rate is 1.5%, both on a continuously compounded basis. The spot price of the Swiss franc is USD 1.0753 Use the above information to answer this and the next five questions. The arbitrage-free forward price of the 240 day Swiss franc forward contract is closest to: O a. CHF 0.9270 per USD Ob CHF 0.9370 per USD Oc CHF 0.9970 per USD As a consultant for the U. S. company. you are asked to recommend how the company could hedge its foreign exchange risk. You recommend: O a. Selling a forward contract on Swiss francs Ob. Buying a put option on Swiss francs OC. Buying a call option on Swiss francs Suppose that the Swiss franc forward contract's market price in USD is higher than its arbitrage-free price in USD. How would you arbitrage? O a. Buy the forward contract; Borrow U. S. dollars; Convert U. S dollars into Swiss francs at the spot exchange rate, Lend Swiss francs O b. Buy the forward contract; Borrow Swiss francs, Convert Swiss francs into U. S. dollars at the spot exchange rate: Lend U. S. dollars Oc. Sell the forward contract; Borrow U. S. dollars, Convert U. S. dollars into Swiss francs at the spot exchange rate; Lend Swiss francs Suppose that the U. S. based company were to buy a forward contract on 1 million Swiss francs with a forward price of CHF 0.9066 per USD and 240 days to the delivery date. 120 days later, the spot exchange rate is CHF 0.8826 per USD and interest rates are unchanged. Use this information to answer questions this and the next two questions. The new arbitrage-free forward price is closest to O a CHF 0.8812 per USD O b. CHF 0.9012 per USD Oc CHF 0.8712 per USD The value of the long forward position is closest to: 0 a. USD 31,600 Ob -USD 31,600 . -USD 32.600 On the delivery date, the spot exchange rate is CHF 0.9000 per USD Which of the following is correct? O a. The counterparty to the U.S. company would experience a gain of USD 8,100 on its forward position Ob. The counterparty to the U. S. company would experience a loss of USD 8,100 on its forward position . The counterparty to the U. S. company would experience neither a gain nor a loss on its forward position