The Swiss one-year interest rate is 7 percent, while the U.S. one-year interest rate is 2

percent. Assume that interest rate parity exists. If a U.S. firm invests in a Swiss one-year

deposit and sells Swiss francs forward with a forward contract to hedge its exchange

rate exposure, the effective yield from investing in a one-year deposit in Switzerland will

be about:

7%

none of the options listed

9%

2%

4%