Hoffman Bank, Basel (B). Stefan Boerig of Hoff- man Bank now believes that the Swiss franc will
appreciate agairfst the British pound in the coming 3-month period. He has E250.000 to invest. The cur- rent spot rate is 20.7829/SF, the 3-month forward rate is €0.7640/SF, and he expects the spot rates to reach
.60.7995/SF in three months. a. Calculate Stefan's expected profit, assuming a
pure spot market speculation strategy. b. Calculate Stefan's expected profit, assuming he buys or sells Swiss francs three months
forward.

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