Question 4 Kavita Raman is a foreign exchange trader for a bank in New York. She has $1 million (or its ket investment. Kavita s for three months, or make a covered interest Swiss franc equivalent) at her disposal for a short term money mar wonders if she should invest in U.S. dollar arbitrage (CIA) investment in the Swiss fran c for three months. She faces the following quotes: Assumptions Arbitrage funds available Spot exchange rate (SFr/S) 3-month forward rate (SFr/s) U.S. dollar 3-month interest rate $1,000,000 1.2810 1.2740 4.800% per year 3.200% per year Swiss franc 3-month interest rate Where do you recommend that Kavita Raman invest, and why? Briefly explain