USInvestments with a 1-Year Maturity Can Be Made for 6

question 61

Multiple Choice

U.S.investments with a 1-year maturity can be made for 6% and Swiss 1-year investments can be made for 3%.If the spot exchange rate is SFr1.6/$,which of the following 1-year forward exchange rates would convince you to invest in Switzerland?

• A) SFr1.55/$
• B) SFr1.60/$
• C) SFr1.65/$
• D) SFr1.70/$

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Definitions:

Financial Assets

Assets that derive value because of a contractual claim, such as bank deposits, stocks, bonds, and investments.

Pension Reserves

Are funds set aside by employers, governments, or other organizations to support employees' retirement benefits.

Real Estate

Property consisting of land and the buildings on it, along with its natural resources such as crops, minerals, or water.

Mutual Fund Shares

Units of ownership in a mutual fund, representing an investor's proportionate stake in the fund's holdings and entitling them to a share of the fund's profits.