Use the following information for questions 11-12

Current Exchange Rates: $1.6 = 1 British Pound and 2.5 Swiss Francs = $1

Current one-year Inflation Rates: 0% in Switzerland, 4% in Britain, and 2% in the US

11. What should the cross rate be between Francs and Pounds?

1. .25 SF per Pound
2. .64 Pounds per SF
3. 1.56 SF per Pound
4. 4 SF per Pound

12. If interest parity holds true, what is the expected exchange rate one year from now?

1. .613 Dollars per Pound
2. .637 Pounds per Dollar
3. 1.57 Pounds per Dollar
4. 1.63 Dollars per Pound