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QUESTION
Covered Interest Parity versus Uncovered Interest Parity a) From the perspective of a U. investor who can invest in the U. or in Switzerland, provide...
Covered Interest Parity versus Uncovered Interest Parity
a) From the perspective of a U.S. investor who can invest in the U.S. or in Switzerland, provide the formula for uncovered interest parity.
b) Assume investors are risk neutral. If you were seeking to forecast the U.S. dollar exchange rate versus the Swiss Franc, would you expect to do better using the formula for covered or uncovered interest parity? Explain why.
