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Spot exchange rate ILS3.05-3.13/USD 3-monthsILS3.19-3.20/USD 6-months ILS3.31-3.45/USD 9-months ILS3.61-3.89/USD b)Consider the following quotes on the Israeli New Shekel (ILS) and the U.S. Dollar (USD): i.Suppose

Spot exchange rate ILS3.05-3.13/USD

3-monthsILS3.19-3.20/USD

6-months ILS3.31-3.45/USD

9-months ILS3.61-3.89/USD

b)Consider the following quotes on the Israeli New Shekel (ILS) and the U.S. Dollar (USD):

i.Suppose that you are a U.S.-based trader and would like to enter a forward-forward forex swap into Israeli New Shekel worth USD1,000,000 in three months' time for six months. Calculate and explain the cash flows associated with this swap transaction.

ii.Is the U.S. Dollar trading at a forward premium or discount? Justify your answer clearly.

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