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Question
Suppose that the one-year Swiss interest rate is 1% and the one-year U.K. interest rate is 11%. If the current spot rate is 0.75 Swiss franc per pound, what must the one-year forward rate (SFr/pound) be according to the approximate covered interest parity?
a. 0.675
b. 0.730
c. 0.770
d. 0.825
Answer
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