Question: Problem 6.13 Casper Landsten -- UIA (B) Casper Landsten, using the same values and assumptions as in the previous question, now decides to seek the

Problem 6.13 Casper Landsten -- UIA (B) Casper Landsten, using the same values and assumptions as in the previous question, now decides to seek the full 4.800% return available in US dollars by not covering his forward dollar receipts -- an uncovered interest arbitrage (UIA) transaction. Assess this decision. Assumptions Value SFr. Equivalent Arbitrage funds available $1,000,000 SFr. 1,281,000 Spot exchange rate (SFr./S) 1.2810 3-month forward rate (SFr./$) 1.2740 B/E S2 Expected spot rate in 90 days (SFr./$) 1.2700 U.S. dollar 3-month interest rate 4.800% $ 129 1240 10 12010 Swiss franc3-month interest rate 3.200% X 12719367 1/

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