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The 1-year interest rate on Swiss francs is 5 percent and the dollar interest rate is 8 percent. (a) If the current $/SF spot rate

The 1-year interest rate on Swiss francs is 5 percent and the dollar interest rate is 8 percent.

(a) If the current $/SF spot rate is $0.60,what would you expect the spot rate to be in1year?

(b) Suppose US policy changes and leads to an expected future spot rate of $0.63. What would you expect the dollar interest rate to be now? (Assume no change in the Swiss interest rate.)

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