Question $2$

The spot exchange rate between the Swiss Franc and US dollar was $1\mathrm{.}0404($ $ per franc$).$

Interest rates in the United States and Switzerland were $1\%$ and $0\mathrm{.}4\%$ per annum,

respectively, with quarterly compounding. The $3-$month forward exchange rate was $1\mathrm{.}0300$

$($$ per franc$).$ What arbitrage strategy was possible? How does your answer change if the

exchange rate is $1\mathrm{.}0500($ $ per franc$).$