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The spot exchange rate between the Swiss franc and U.S. dollar is 0.98 ( per franc). Interest rates in the United States and Switzerland are
The spot exchange rate between the Swiss franc and U.S. dollar is 0.98 ( per franc). Interest rates in the United States and Switzerland are 3.25% and 1% per annum, respectively, with continuous compounding. The 6-month forward exchange rate was 1.01 (\$ per franc). What arbitrage strategy was possible? How does your answer change if the forward exchange rate is 0.96 ( $ per franc)
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