u believe the Swiss franc will appreciate versus the U$.$S$.$ dollar in the coming

three$-$month period and have CHF $100,000$ to invest. The current spot rate is $$0\mathrm{.}5640/$CHF$,$

the three$-$month forward rate is $$0\mathrm{.}5820/$CHF$,$ but you expect spot rates to reach

$$0\mathrm{.}6250/$CHF in three months.

a$.$ Calculate the expected profit from a pure spot market speculation strategy.

b$.$ Calculate the expected profit assuming that you buy or sell the SF three months

forward $($whichever is appropriate$).$

c$.$ Why might you prefer the forward contract to the spot market strategy?