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Current one-year rates are 3% in Switzerland and 5% in USA. The current spot rate is 1.12 Sf/$. What is the expected (in one year)

Current one-year rates are 3% in Switzerland and 5% in USA. The current spot rate is 1.12 Sf/$.

  1. What is the expected (in one year) future FX rate according to Interest Rate Parity? Use exact equation.
  2. What is the synthetic one-year forward rate?
  3. What is the market one-year forward rate?
  4. How much is the one-year forward premium on the Swiss Franc?

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