) The ER between the Swiss franc and the US dollar is one to one in the spot market The interest rates in Switzerland and the US are 01 and 03 respectively Swiss franc What kind of arbitrage will induce a profit for you, if the forward rate is 96 Swiss francs equal $1 Assume you start with $1 milli...

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) The ER between the Swiss franc and the US dollar is one to one in the spot market. The interest rates in Switzerland and the US are .01 and .03 respectively. Swiss franc. What kind of arbitrage will induce a profit for you, if the forward rate is .96 Swiss francs equal $1? Assume you start with $1 million.

1. Solve the problem. How much is the profit, if you do not leave an open position? That is, you cover the position.

2. Explicate the concept of IPT and apply it to this case. Will the situation I have given you persist? If so why, or if not why not?

Posted Date: May 16, 2024 04:10 PM

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