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Question
Suppose that the one-year U.S. interest rate is 13% and the one-year Swiss interest rate is 2%. If the current spot rate is $1.40 per Swiss franc, what must the one-year forward rate ($/SFr) be according to the approximate covered interest parity?
a. 1.246
b. 1.330
c. 1.470
d. 2.100
Answer
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