The Prefix Contra- Means

question 101

Multiple Choice

The prefix contra- means:

• A) against.
• B) bad.
• C) false.
• D) together.

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Definitions:

Covered Interest Arbitrage

An investment strategy that involves taking advantage of the interest rate differential between two countries while hedging against exchange rate risk.

Risk-Free Profits

Profits made through investment strategies that are supposed to incur no risk to the investor.

Interest Rate Parity

A financial theory stating that the difference in interest rates between two countries will be offset by changes in the exchange rate between their currencies.

Covered Interest Arbitrage

The practice of exploiting the interest rate differential between two countries while hedging against exchange rate risk using forward contracts.