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Intro The current exchange rate between the dollar and the Swiss franc is $1.08 per franc. Interest rates are 3.7% in the U.S. and 5.6%
Intro The current exchange rate between the dollar and the Swiss franc is $1.08 per franc. Interest rates are 3.7% in the U.S. and 5.6% in Switzerland, for all maturities. The interest rates are quoted with continuous compounding. Part 1 Attempt 1/10 for 10 pts. What should be the forward price, i.e., the forward exchange rate, for delivery in 5 months in dollars per franc)? 2+ decima Submit Part 2 Attempt 1/5 for 10 pts. If the actual forward price is $1.061 per franc, what could you do to benefit from this situation? Check all that apply: Borrow dollars now and exchange them for francs. Borrow francs now and exchange them for dollars. Take a long position in the forward contract. Take a short position in the forward contract. Submit Part 3 Attempt 1/10 for 10 pts. What will be your profit in 5 months if you borrow 9 million francs now (in $)? 0+ decima Submit
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