Multiple Choice
Due to ____, market forces should realign the relationship between the interest rate differential of two currencies and the forward premium (or discount) on the forward exchange rate between the two currencies.
A) forward realignment arbitrage
B) triangular arbitrage
C) covered interest arbitrage
D) locational arbitrage
Correct Answer:
Verified
Correct Answer:
Verified
Q59: Based on interest rate parity, the larger
Q60: Assume that interest rate parity holds. The
Q61: Locational arbitrage explains why prices among banks
Q62: Assume that interest rate parity holds, and
Q63: Realignment in the exchange rates of banks
Q65: Bank A quotes a bid rate of
Q66: Based on interest rate parity, the larger
Q67: Which of the following is not true
Q68: If interest rate parity (IRP) exists, then
Q69: Assume that the U.S. investors are benefiting