Assume that you have the following information Spot Rate 1 30 CHF 1 EUR Six month Forward Exchange Rate 1 25 CHF 1 EUR One Year EUR Interest Rate 0 50 annually CHF Swiss Franc What is the One Year CHF rate under parity conditions Assuming you have 1,000 Euros, show that it is in parity using the box method and show the return after 1 year investing in either Europe or Switzerland (3 POINTS)

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Assume that you have the following information: Spot Rate: 1.30 CHF/1 EUR Six-month Forward Exchange Rate: 1.25 CHF/1 EUR One-Year EUR Interest Rate: 0.50 %

Assume that you have the following information:

Spot Rate:	1.30 CHF/1 EUR
Six-month Forward Exchange Rate:	1.25 CHF/1 EUR
One-Year EUR Interest Rate:	0.50 % annually

CHF: Swiss Franc

What is the One-Year CHF rate under parity conditions? Assuming you have 1,000 Euros, show that it is in parity using the "box" method and show the return after 1 year investing in either Europe or Switzerland. (3 POINTS)

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