What is the investor total profit

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A US investor observes the following data in the FX market: spot exchange rate between the Swiss Franc and US Dollar is 1.0404 ($ per CHF); the continuously compounded interest rates in the US and Switzerland are 0% and 0.25%, respectively; the 3-month currency forward price is 1.0300 ($ per CHF). Ignoring transactions costs, is there an arbitrage opportunity and, if so, what is the investor's total profit, if she begins by borrowing 1,000 CHF?

Reference no: EM132634855

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