Peder Mueller is a foreign exchange trader for a bank in New York. He has $1 million (or its Swiss franc equivalent) to invest for three months. Using the following values and assumptions, a. Spot exchange rate (CHF-USD1.00) 3-month forward rate (CHF-USD1.00) Expected spot rate in 3 months (CHF-USD1.00) U.S. dollar 3-month interest rate (%) Swiss franc 3-month interest rate (%) 1.2810 1.2740 1.2700 4.800 3.200 He decides not cover his forward dollar receipts-an uncovered interest arbitrage (UIA) transaction. How much profit can he make if his assumptions are true? $4,731 b. $1,538 c. $7,061 d. $12,765

Peder Mueller is a foreign exchange trader for a bank in New York. He has \$1 million (or its Swiss franc equivalent) to invest for three months. Using the following values and assumptions, He decides not cover his forward dollar receipts - an uncovered interest arbitrage (UIA) transaction. How much profit can he make if his assumptions are true? a. $4,731 b. $1,538 c. $7,061 d. $12,765