IRP Relationship Assume that interest rate parity exists, along with the following information:
Spot rate of Swiss franc
month forward rate of Swiss franc 12-month forward rate of Swiss franc
Assume that the annualized U.S. interest rate is 7 percent for a 6 -month maturity and a 12 -month maturity. Do you think the Swiss interest rate for a 6-month maturity is greater than, equal to, or less than the U.S. interest rate for a 6 -month maturity? Explain.
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