The home currency is USD. Borrow in Swiss francs (CHF) and lend in Australian dollars (AUD)
AUD/CHF two-year forward exchange rate (mid-point) = 0.64963. 
Interpretation : One Aussie dollar can be exchanged for 0.64963 Swiss  francs.Spot AUD/CHF exchange rate (midpoint) = 0.6878. 
Two-year borrowing opportunity in Swiss sovereign debt: 0.022%
Two-year lending opportunity in Australian sovereign debt: 2.558%
USD/CHF two-year forward exchange rate (midpoint) = 0.92184. 
Interpretation  One USD can be exchanged for 0.92184 Swiss francs.

Attempt to construct your trade so that you investing the equivalent of USD  1,000,000, based on the two-year forward rate exchange rate.

What expected profit - or loss - from this trade.

Answer rating: 100% (QA)

To construct the trade we need to determine how much we need to borrow in CHF and ho... View the full answer