Question
1. Assume the exchange rate between the euro and the Swiss franc is currently tradingat S[EUR/CHF] = .9206.Youobservethe three month forward rate is .9258. From
1.Assume the exchange rate between the euro and the Swiss franc is currently tradingat S[EUR/CHF] = .9206.Youobservethe three month forward rate is .9258. From this information alone, relative to the Swiss franc you can conclude the eurois:
A.At a forward discount, and the euro/Swiss 3-month interest differential is 2.25% p.a.
B.At a forward discount, and the euro/Swiss 3-month interest differential is .56% p.a.
C.At a forward premium, and the euro/Swiss 3-month interest differential is .56% p.a.
D.At a forward premium, and the euro/Swiss 3-month interest differential is 2.25% p.a.
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Principles Of Corporate Finance
Authors: Lawrence J. Gitman, Sean M. Hennessey
2nd Canadian Edition
0321452933, 978-0321452931
