Description of this paper

Suppose interest rate differential in dollar and S...

Description

Solution


Question

Suppose interest rate differential in dollar and Swiss francs is 4 percent per annum (U.S. and Swiss interest rates are 7 and 3 percent respectively) and SF is in 1.4 percent premium against dollar, with spot rate at $.633/SF and one year forward in SF is $.6419/SF. What actions would you take to profit from the above scenario provided that you can borrow SF1, 000,000.00 or its dollar equivalent?

 

Paper#4226 | Written in 18-Jul-2015

Price : $25
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