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    Exam 17: Options on Stock Indices and Currencies
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    The Domestic Risk-Free Rate Is 3
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The Domestic Risk-Free Rate Is 3

Question 1

Question 1

Multiple Choice

The domestic risk-free rate is 3%.The foreign risk-free rate is 5%.What is the risk-neutral growth rate of the exchange rate?


A) +2%
B) -2%
C) +5%
D) +3%

Correct Answer:

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