Suppose you observe an exchange rate of S($/SFr) = 0.85 (i. e., SFr 1 = $.85). The one-year forward rate is F1($/SFr) = 0.935 (i. e., SFr 1 = $.935). The annual interest rate is 5% in the U. S and 2% in Switzerland. A dollar-based investor can profit by borrowing , exchanging them for , investing in , and entering a one-year forward contract to .

An employer who is considering hiring eva has asked donna, eva’s former supervisor, for a report on eva. in truth, eva’s work for donna has been only average. however, eva is donna’s friend, and donna knows that eva probably will not get the job if she says anything negative about eva, and donna knows that eva desperately needs the job. further, donna knows that if the situation were reversed, she would not want eva to mention her deficiencies. nevertheless, it has been donna’s policy to reveal the deficiencies of employees when she has been asked for references by employers, and she knows that some of eva’s faults may be bothersome to this particular employer. finally, this employer has leveled with donna in the past when donna has asked for a report on people who have worked for him. should donna reveal deficiencies in eva’s past performance? (remember to use one of the three moral theories acceptable for this test to solve this dilemma. any discussion of any personal opinion, religious perspective, or theory other than the moral theories acceptable for this test will result in a score of "0" for this question.)