Question 7 (2 marks) The following quotes are available in the market: Spot rate SF1.02/$ Three-month forward

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Question 7 (2 marks)

The following quotes are available in the market:

Spot rate SF1.02/$

Three-month forward rate SF1.06/$

Three-month interest rate in the United States 5.4%

Three-month interest rate in Switzerland 5.6%

Assume that you can borrow $1,000,000 or its SF equivalent How much profit can the trader make from covered interest arbitrage? Explain the steps and show your calculations.

HOW WILL THE THREE MONTHS BE EXPRESSED IN THE EQUATION?

Posted Date: Jun 25, 2024 04:31 PM

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Question 7 (2 marks) The following quotes are available in the market: Spot rate SF1.02/$ Three-month forward

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