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Why is it such a problem again? In fact, it is very easy to understand the principle of interest rate parity, and there is no need to apply formulas at all.

In the simplest and most understandable way:

At first, 1 USD = 1.42 Swiss francs, that is, USD/CHF = 1.42, indicating that 10000 USD equals 14200 Swiss francs.

At the same time, deposit 10000 USD and 14200 Swiss francs for 3 months.

After 3 months, the principal and interest of USD =10000 * (1+4% * (3/12)) =10/00 USD; Swiss franc principal and interest =14200 * (1+6% * (3/12)) =14413.

According to the interest rate parity, the final principal and interest of the initial equivalent currency are also equivalent, and there is no arbitrage space. So the three-month forward is 10 100 USD = 144 13 Swiss francs. The answer to this question is:

3. The three-month forward exchange rate is 1 USD = 1.43986 CHF, that is, three-month USD/CHF = 1.4270.

2.1.4270-1.42 = 0.0070, and the US dollar will withdraw 70 points from the Swiss franc within three months.

1, forward premium.

Remember the above principle, how to change it will be counted.

If calculated according to the formula in the textbook:

Spot exchange rate USD/CHF = 1.42,

Exchange integral formula = spot *(Rc-Ru)/( 1+Ru)

Where SPOT is the spot exchange rate, Rc is the Swiss franc interest rate and Ru is the US dollar interest rate. The interest rate needs to be adjusted according to the forward term.

Therefore, the exchange point =1.42 * (6% * 3/12-4% * 3/12)/(1+4% * 3/12) =/kloc.

1, the swap point is positive, and the forward premium. Or the currency interest rate on the left is lower than the currency interest rate on the right, and the forward premium increases.

2. The premium point is 70 points.

3. Forward exchange rate = spot exchange rate+swap point =1.42+0.0070 =1.4270.