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Today's Spot rate of Swiss franc =$.60 1 -year forwatd rate as of today for Swiss frane = 5.63 Expected spot rate 1 yoar from
Today's Spot rate of Swiss franc =$.60 1 -year forwatd rate as of today for Swiss frane = 5.63 Expected spot rate 1 yoar from now =$.64 Rate on 1-year deposits denominated in $ wiss francs =7% Rate on 1-year deposits denominated in U.S. dolars =9% SHOW ALL WORK: a. For U:S, investors with $1,000,000, what would the rate of return from covered interest arbitrage? b. Explain the realignment process that take place both on the spot market and on the forward market. To accompany your explanation, draw on papor the supply and demand graphs for esch maket. Clearly indicate the tabets on the Y and X axes, and show which curve (supply or demand) would shif in esch market and the resulting effects on the spot market and the forward market. Upload the picture of your graph. If you have difficilisis in allaching the grapti here. you cart email if to
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