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.As the profitability of assets in Switzerland rises relative to the profitability of assets in the United States, U.S.residents make additional investments in Switzerland; this leads to an increased demand for francs and a depreciation of the dollar's exchange value.