Given the table what is:

1. Covered Rate if return from US (Rch) and then for Swtzerland (Rcf)?

2. To set up a covered interest arbitrage, you should borrow in __ and invest in ____.

USD & CHF or Vise versa

3. Trading based on covered interest arbitrage will cause

a. downward pressure on Rf

b. Upward pressure on Rh

c. downward pressure on CHF's SR.

or d. donward pressure on CHF's FR

Question 25 Given the information: Interest rate in US (Rh): Interest rate in Switzerland (RF): The current spot rate for CHF (SR): 1-year forward rate for CHF (FR): 4% 6% $0.80 $0.78 What is your covered rate of return from US (Rch)? 6.67% 1.40% 3.35% 8.72%