The risk-free one-year interest rate in the swiss franc (chf) is 1.5%, while the risk-free one-year interest rate in the euro (eur) is 3.5%. the current spot exchange rate is chf 1.2000 (a) your swiss client (whose wealth and profits are in swiss francs) has an obligation of eur 10,000, six months from now. how can your client construct a money-market hedge, to fund this obligation without exchange-rate risk? assume your client can borrow and lend at the risk-free rate in both currencies. show that the strategy you propose is costless today and allows your client to meet his obligation at a fixed exchange rate that is known today. find that fixed exchange rate.

(b) you spot a six-month euro forward in the market that has a forward exchange rate of chf 1.2100 per eur. how can you make an arbitrage profit for your own firm in this case? ignore your client’s obligation from the previous part, and assume that your firm can also borrow and lend at the risk-free rate in both currencies, as well as buy or sell the euro forward.

(c) which parity relationship is violated by the forward contract in part 2b?

This problem has been solved! see the answercompute and interpret altman's z-scoresfollowing is selected financial information for ebay, for its fiscal years 2005 and 2006.(in millions, except per share data) 2006 2005current assets $ 4,970.59 $ 3,183.24current liabilities 2,518.39 1,484.93total assets 13,494.01 11,788.99total liabilities 2,589.38 1,741.00shares outstanding 1,368.51 1,404.18retained earnings 4,538.35 2,819.64stock price per share 30.07 43.22sales 5,969.74 4,552.40earnings before interest and taxes 1,439.77 1,445.18compute and interpret altman z-scores for the company for both years. (do not round until your final answer; then round your answers to two decimal places.)2006 z-score = answer2005 z-score = answerwhich of the following best describes the company's likelihood to go bankrupt given the z-score in 2006 compared to 2007.the z-score in 2006 is half of the 2005 score. both z-scores are well above the score that represents a healthy company. the z-score in 2006 is double the 2005 score. the z-score has increased sharply, which suggests the company has greatly increased the risk of bankruptcy. the z-score in 2006 is half of the 2005 score. the z-score has decreased sharply, which suggests the company is in financial distress. the z-score in 2006 is double the 2005 score. the z-score has increased sharply, which suggests the company has greatly lowered the risk of bankruptcy.