Question $1$

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 against USD.? Given

this information:

U$.$S$.$ investors who invest in Swiss covered with a forward contract earn a

lower rate of return than if they invested in the U$.$S$.$

U$.$S$.$ investors who invest in Swiss covered with a forward contract earn a

higher rate of return than if they invested in the U$.$S$.$

Swiss investors who invest in U$.$S$.$ covered with a forward contract earn the

same rate of return as if they invested in Switzerland.

US investors who invest in U$.$S$.$ earn the same rate of return as if they

invested in Switzerland covered with a forward contract.

Swiss investors who invest in Swiss earn a higher rate of return than if they

invested in the U$.$S covered with a forward contract.

Swiss investors who invest in U$.$S$.$ covered with a forward contract earn the

higher rate of return as if they invested in Switzerland.