Assume US and Swiss Investors Require a Real Rate of Return

Multiple Choice

Assume U.S. and Swiss investors require a real rate of return of 3 percent. Assume the nominal U.S. interest rate is 6 percent and the nominal Swiss rate is 4 percent. According to the international Fisher effect, the Swiss franc will ____ by about ____.

A) appreciate; 3 percent
B) appreciate; 1 percent
C) depreciate; 3 percent
D) depreciate; 2 percent
E) appreciate; 2 percent