Suppose that the one-year U.S.interest rate is 3% and the equivalent one-year Swiss interest rate is 3%.According to the covered interest rate parity,there is a forward flat on the Swiss franc.

Question

Quizplus · Accepted Answer

Covered interest rate parity states that the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. If the interest rates are the same, the forward rate should be at parity with the spot rate, indicating a forward flat.

Suppose That the One-Year U