We supposed: S$/: $1.20/ F$/: $1.08/ (one-year)

i : 0.00% (one-year) i$: 2.00% (one-year)

Suppose you are a U.S. investor and decide to make a covered investment of your dollars in Euro assets for one year. What is your percentage return measured in U.S. dollars?

a. -10.00%

b. -5.50%

c. 15.50%

d. 16.67%

At what forward rate does interest rate parity hold?

a. 1.2000/$

b. 1.2240/$

c. $1.3000/

d. $1.4300/