Assume the U

Multiple Choice

Assume the U.S. interest rate is 2 percentage points higher than the Swiss rate, and the forward rate of the Swiss franc has a 4 percent premium. Given this information:

A) Swiss investors who attempt covered interest arbitrage earn the same rate of return as if they invested in Switzerland.
B) U.S. investors who attempt covered interest arbitrage earn a higher rate of return than if they invested in the United States.
C) Swiss investors who attempt covered interest arbitrage earn the same rate of return as if they invested in Switzerland AND U.S. investors who attempt covered interest arbitrage earn a higher rate of return than if they invested in the United States.
D) None of these are correct.