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The current USD/CHF spot exchange rate is USD0.5685/CHF. If you invest one dollar for 90 days in the US domestic riskless asset, you earn USD1.0101

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The current USD/CHF spot exchange rate is USD0.5685/CHF. If you invest one dollar for 90 days in the US domestic riskless asset, you earn USD1.0101 and if you invest one CHF for 90 days in Swiss riskless asset, you earn CHF 1.0113 (in both cases we assume continuous compounding). A broker offers you 90-day forward contract to buy or sell 1 million CHF at the exchange rate of USD 0.55/CHF. Is there arbitrage profit to be made here? In case your answer is yes please describe arbitrage strategy and estimate profit. (10 marks)

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