Exhibit 11.1 Assume the Following: (1) the Interest Rate on Six-Month Treasury

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Exhibit 11.1

Assume the following: (1) the interest rate on six-month treasury bills is 8 percent per annum in the United Kingdom and 4 percent per annum in the United States; (2) today's spot price of the pound is $1.50, while the six-month forward price of the pound is $1.485.

-Refer to Figure 12.2.If Swiss manufacturing costs increase relative to those of the United States, then there would occur an increase in the supply of francs and an appreciation in the dollar's exchange value.