Assume the Following Information From the Perspective of U

question 50

Multiple Choice

Assume the following information:
$\begin{array} { l l l } \text { Spot rate today of Swis franc } & = & \$ 60 \\1 \text {-year forward rate as of today far Swiss franc } & = & \$ .63 \\\text { Fognected spot rate l year from now } & = & \$ 64 \\\text { Rate an 1-year deposits denominated in Swiss francs } & = & 7 \% \\\text { Rate an } 1 \text {-year deposits denominated in U.S. dallars } & = & 9 \%\end{array}$
From the perspective of U.S. investors with $1,000,000, covered interest arbitrage would yield a rate of return of ____%.

• A) 5.00
• B) 12.35
• C) 15.50
• D) 14.13
• E) 11.22

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Definitions:

Gastric Contents

The mixture of food, digestive juices, and enzymes present in the stomach.

Skeletal Muscle

A type of muscle tissue that is attached to bones and helps facilitate movement by contracting and relaxing.

Esophagus

The muscular tube that connects the throat (pharynx) with the stomach; plays a key role in moving swallowed food and liquids from the mouth to the stomach.

Involuntary Control

The regulation of bodily functions not consciously controlled, such as the heartbeat and digestion, governed by the autonomic nervous system.