21-1

1 Use the information below to answer the following questions. 10 points U.K. Pound 6-months forward () Japan Yen 6-months forward () Switzerland Franc 6-months forward (SF) Currency per U.S. $ 0.5135 0.5204 108.21 106.96 1.0492 1.0478 Suppose Interest rate parity holds, and the current six-month risk-free rate in the United States is 5.1 percent What must the six-month risk-free rate be in Great Britain? Great Britain risk-free rate What must the six-month risk-free rate be in Japan? Japanese risk-free rate What must the six-month risk-free rate be in Switzerland? Swiss risk-free rate