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The 1-year interest rate on Swiss francs is 5 percent and the dollar interest rate is 8 percent.

(A) if the current $/SF spot rate is $0.60, what would you expect the spot rate to be in 1 year.

(B) Suppose US policy changes and leads to an expected future spot rate of $0.63. What would you expect the dollar interest rate to be now? ( assume no change in Swiss interest rate)

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