Example 9-1: Suppose that on March 13, 2020, a U.S. firm plans to purchase 3 million Swiss francs' (Sf) worth of Swiss bonds from a Swiss FI in one month's time. The Swiss FI wants payment in Swiss francs. Believing that the exchange rate of U.S. dollars for Swiss francs will move against it in the next month, the U.S. firm will convert dollars into Swiss francs today. The spot exchange rate for March 13, 2020 (reported in Table 9-1), of U.S. dollars for Swiss francs (or CHF/USD) is 1.0521, or one franc costs 1.0521 in dollars. Consequently, the U.S. firm must convert: One month after the conversion of dollars to Swiss francs, the Swiss bond purchase deal falls through and the U.S. firm no longer needs the Swiss francs it purchased at $1.0521 per franc. The spot exchange rate of the Swiss franc to the dollar has fallen or depreciated over the month so that the value of a franc is worth only $1.0375, or the exchange • What is the initial amount needed in $ for the 3 million francs? • One month later how much is the 3 million franc worth? • How much did you gain (lose)?