Interest-Rate Parity. Almond Shoe, Inc. sells to a wholesaler in Switzerland. The purchase price of a shipment is 50,000 SF with terms of 90 days. Upon payment, Almond will convert the SF to dollars....

Interest-Rate Parity. Almond Shoe, Inc. sells to a wholesaler in Switzerland. The purchase price of a shipment is 50,000 SF with terms of 90 days. Upon payment, Almond will convert the SF to dollars.

(a) If Almond’s policy is to hedge its foreign exchange risk, what would it do?

(b) Is the SF at a premium or at a discount?

(c) What is the implied differential in interest rates between the two nations, using the interestrate parity theory?