Assume the following information: Spot rate today of Swiss franc 1-year forward rate today for Swiss franc Expected spot rate 1 year from now Rate on 1-year deposits denominated in Swiss francs Rate on 1-year deposits denominated in U.S. E dollars O internationally; internationally internationally; domestically. 4 O domestically; domestically domestically; internationally Based on the covered rate of return, investors should borrow and invest $.60 $.63 $.64 7% 9%

Spot rate today of Swiss franc =$.60 1-year forward rate today for Swiss franc =$.63 Expected spot rate 1 year from now =$.64 Rate on 1-year deposits denominated in =7% Swiss francs Rate on 1 -year deposits denominated in U.S. =9% dollars Based on the covered rate of return, investors should borrow and invest internationally; internationally internationally; domestically domestically; domestically domestically; internationally