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The 1-year interest rate in the U.S. is 10%; in Switzerland it is 12%. The current spot rate (dollars per franc) is $0.40. a. What do you expect the 1-year forward rate to be? b. Is the franc selling at a premium or discount? c. If the expected spot rate in 1 year is $0.38, what is the risk premium?

Econometrics, Economics

  • Category:- Econometrics
  • Reference No.:- M9686592

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