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Suppose the spot rates for the pound, euro, and Swiss franc were $1.40, $1.20, and $1.10, respectively. At the time, the associated one-year interest rates
Suppose the spot rates for the pound, euro, and Swiss franc were $1.40, $1.20, and $1.10, respectively. At the time, the associated one-year interest rates were 12%, 6%, and 4%, respectively, while the U.S. one-year interest rate is 8%. If the interest parity were to hold, which of the following is correct? The forward rate for pound is $1.35 The forward rate for euro is $1.25 The forward rate for Swiss franc is $1.06 The cross rate between pound and euro is 0.86 /
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