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(Solved): You plan to visit Geneva, Switzerland, in three months to attend an international business conferenc ...



You plan to visit Geneva, Switzerland, in three months to attend an international business conference. You expect to incur a total cost of SF8,600 for lodging, meals, and transportation during your stay. As of today, the spot exchange rate is $0.60 per swiss franc and the three-month forward rate is $0.81 per swiss franc. You can buy the three-month call option on SF with an exercise price of $0.82 per swiss franc for the premium of $0.05 per swiss franc. Assume that your expected future spot exchange rate is the same as the forward rate. The three-month interest rate is 8 percent per annum in the United States and 5 percent per annum in Switzerland.



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