Multiple Choice
A UK firm plans to borrow Swiss francs today for a one-year period. The Swiss interest rate is 9 per cent. It uses today's spot rate as a forecast for the franc's spot rate in one year. The UK one-year interest rate is 10%. The expected effective financing rate on Swiss francs is:
A) equal to the UK interest rate.
B) less than the UK interest rate, but more than the Swiss interest rate.
C) equal to the Swiss interest rate.
D) less than the Swiss interest rate.
E) more than the UK interest rate.
Correct Answer:
Verified
Correct Answer:
Verified
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