Kapinsky Capital Geneva (B). Christoph Hoffeman of Kapinsky Capital believes the Swiss franc will appreciate versus the U.S. dollar in the coming 3-month period. He has

$100,000

to invest. The current spot rate is

$0.5820/SF,

the 3-month forward rate is

$0.5640/SF,

and he expects the spot rates to reach

$0.6250/SF

in three months.

a. Calculate Christoph's expected profit assuming a pure spot market speculation strategy.

b. Calculate Christoph's expected profit assuming he buys or sells SF three months forward.