19) Current interest rates are i_$=4%;i=6%. Expected interest rates next year are: i_$=7%;i=3%. Expected spot rate in two years is S₂($/)=1.09. Use the asset market approach to compute the current spot rate S0($/). Please just type in the number without the currency signs. For example, if your answer is $1.25/, then type in 1.25 as your final answer. Please keep at least 2 decimal numbers (up to 5 decimal numbers).

18) Assume Carlton enters into a three-year fixed-for-fixed swap agreement to receive Swiss Franc and pay U.S. dollar annually, on a notional amount of $6,000,000. The spot exchange rate at the time of the swap is SF0.8/$. Which of the following statements is correct about Carlton's position on interest rates in the swaps?

	Euro-		Swiss franc		U. S. dollar		Japanese yen
Years	Bid	Ask	Bid	Ask	Bid	Ask	Bid	Ask
2	3.08	3.12	1.68	1.76	5.43	5.46	0.45	0.49
3	3.25	3.29	2.12	2.17	5.54	5.59	0.56	0.59

Select one:

a. Carlton receives 2.12% interest rate on Swiss Franc and pays 5.59% interest rate on U.S. dollar.

b. Carlton receives 1.76% interest rate on Swiss Franc and pays 5.46% interest rate on U.S. dollar.

c. Carlton receives 2.17% interest rate on Swiss Franc and pays 5.54% interest rate on U.S. dollar.

d. Carlton receives 5.59% interest rate on Swiss Franc and pays 2.12% interest rate on U.S. dollar.

e. Carlton receives 2.12% interest rate on Swiss Franc and pays 5.54% interest rate on U.S. dollar.