Assume the U

question 45

Multiple Choice

Assume the U.S. interest rate is 2% higher than the Swiss rate, and the forward rate of the Swiss franc has a 4% premium. Given this information:

• A) Swiss investors who attempt covered interest arbitrage earn the same rate of return as if they invested in Switzerland.
• B) U.S. investors who attempt covered interest arbitrage earn a higher rate of return than if they invested in the U.S.
• C) A and B
• D) none of the above

---

Definitions:

Cost of Goods Purchased

The total expense incurred by a company to buy the goods it has sold or will sell, excluding any indirect costs.

Finished Goods Inventory

The value of a company's inventory of products that are complete and ready for sale.

Cost of Goods Manufactured

The total cost of goods completed during a specific period, including labor, materials, and overhead.

Cost of Goods Available for Sale

The total cost of beginning inventory plus the cost of goods purchased or manufactured during an accounting period, before any sales are subtracted.