Answered You can buy a ready-made answer or pick a professional tutor to order an original one.
Assume the following information:Spot rate today of Swiss franc=$.601-year forward rate as of today for Swiss franc=$.63Expected spot rate 1 year from now=$.64Rate on 1 year deposits denominated in Sw
Assume the following information:
Spot rate today of Swiss franc
=
$.60
1-year forward rate as of today for Swiss franc
=
$.63
Expected spot rate 1 year from now
=
$.64
Rate on 1 year deposits denominated in Swiss francs
=
7%
Rate on 1 year deposits denominated in U.S. dollars
=
9%
From the perspective of Swiss investors with SF1,000,000, covered interest arbitrage would yield a rate of return of ______%.
- @
- 2 orders completed
- ANSWER
-
Tutor has posted answer for $10.00. See answer's preview
******* **** *** *********** ** ***** investors *** ******* interest ********* ***** ***** * **** ** return ** ********************* 1 * ******* ***** the ** ******* ** * ** spot rate to ***** $600000 **************** * - ****** $600000 ***** ** * ******** *** * **** * ************ value 600000*109=$654000 Simultaneously ***** **** a ******* contract for **** of $ ** *** 1 year ******* **** ** **** ** 063Step * - At the *** of *** **** ***** *** $ ******* ** ******* ******* it ** ** * ***** ** *** **************** then ***** ** {(103809524/1000000) * ****** = ****