Multiple Choice
If interest rate parity does not hold, and the forward ____ is ____ the interest rate differential, then foreign financing with a simultaneous hedge of that position in the forward market results in higher financing costs than those of domestic financing.
A) premium; higher than
B) discount; higher than
C) premium; less than
D) premium; higher than AND discount; higher than
Correct Answer:
Verified
Correct Answer:
Verified
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