$5.$ The following rates are available in the markets:

Current spot exchange rate: $$1\mathrm{.}000/$SFr

Current $30-$day forward exchange rate: $$1\mathrm{.}010/$SFr

Annualized interest rate on $30-$day dollar$-$denominated bonds: $12\%(1\mathrm{.}0\%$ for $30$ days$)$

Annualized interest rate on $30-$day Swiss franc$$denominated bonds: $6\%(0\mathrm{.}5\%$ for $30$ days$)$

a$.$ Is the Swiss franc at a forward premium or discount?

b$.$ Should a U$.$S$.-$based investor make a covered investment in Swiss franc$$denominated $30-$day bonds, rather than investing in $30-$day dollar$-$denominated bonds? Explain.

c$.$ Because of covered interest arbitrage, what pressures are placed on the various rates? If the only rate that actually changes is the forward exchange rate, to what value will it be driven?