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The interest rate on one-year risk-free bonds is 5% in the United Kingdom and 3.75% in Switzerland. The current exchange rate is 0.5BP per Swiss

The interest rate on one-year risk-free bonds is 5% in the United Kingdom and 3.75% in Switzerland. The current exchange rate is 0.5BP per Swiss franc. Suppose that you are British investor and you expect the Swiss franc to appreciate by 2% over the next year. Calculater the foreign currency risk premium.

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