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Current spot rate of SF = $0.6543; 1-year interest rate in the U.S. = 7.5%; 1-year interest rate in the Switzerland = 3.5% If one

Current spot rate of SF = $0.6543; 1-year interest rate in the U.S. = 7.5%; 1-year interest rate in the Switzerland = 3.5% If one year later, the spot rate for SF turns out to be $0.6625, according to IFE, would SF be overvalued or undervalued in real terms?

A. Overvalued

B. Undervalued

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