Assume the UK interest rate is 2% higher than the Swiss rate, and the forward rate of the Swiss franc has a 4% 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) UK investors who attempt covered interest arbitrage earn a higher rate of return than if they invested in the UK
C) A and B
D) none of the above
Correct Answer:
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