Suppose that the one-year Swiss interest rate is 1% and the one-year U.K. interest rate is 11%. If the current spot rate is 0.75 Swiss franc per pound, what must the one-year forward rate (SFr/pound) be according to the approximate covered interest parity? a) 0.675 b. 0.730 c) 0.770 d. 0.825

You have $10,000 to invest.

The current spot rate: S_$/ = 2.00, the 90-day forward: F⁹⁰_$/ = 1.70, annual interest rates: i_US = 4% and i_UK = 8%.

If you invest $10,000 in the U.S. for 90 days, you will get $____________. If you invest in the U.K. and cover in the forward market for 90 days, you will get $__________.

$10,100: $8670

$10,400: $9,180

$10,100: $10,133

$10,400: $10,692

The following information on the spot, 6-month forward rates for C$ in terms of $ and the interest rates of the respective currencies offer a covered interest arbitrage opportunity: St = $0.8150/C$, Ft+6 = $0.8125/C$, i_$ = 3% and i_c$ = 4%

a) True

b) False