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

U.S.investments with a one-year maturity can be made for 6% and Swiss one-year investments can be made for 3%.If the spot exchange rate is Sf1.6/$, which of the following one-year forward exchange rates would convince you to invest in Switzerland?

A) Sf1.55/$
B) Sf1.60/$
C) Sf1.65/$
D) Sf1.70/$ Difference in interest rates = Difference between forward and spot rates

Correct Answer:

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