Suppose 6 months ago a Swiss investor bought a 6-month U.S.Treasury bill at a price of $9,708.74, with a maturity value of $10,000.The exchange rate at that time was 1.420 Swiss francs per dollar.Today, at maturity, the exchange rate is 1.324 Swiss francs per dollar.What is the annualized rate of return to the Swiss investor?

Question

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The correct answer is A because the Swiss investor lost money on this investment. The investor paid 9,708.74 * 1.420 = 13,772.32 Swiss francs for the T-bill. At maturity, the investor received $10,000, which is worth 10,000 * 1.324 = 13,240 Swiss francs. The investor lost 13,772.32 - 13,240 = 532.32 Swiss francs on this investment. The annualized rate of return is -532.32 / 13,772.32 * 2 = -7.92%.

Suppose 6 Months Ago a Swiss Investor Bought a 6-Month