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The spot exchange rate between the Swiss Franc and U.S. dollar is 1.0845 ($ per franc). Interest rates in the U.S. and Switzerland are 0.09%
The spot exchange rate between the Swiss Franc and U.S. dollar is 1.0845 ($ per franc). Interest rates in the U.S. and Switzerland are 0.09% and 0.27% per annum, respectively, with continuous compounding. The three-month forward exchange rate is 1.0297 ($ per franc). What arbitrage profits (in dollars) can we make from an initial capital of 1000 Swiss francs? If no arbitrage profits can be made, what would be the size of the losses? (Please round all numbers to 4 decimal digits in your calculations)
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