The Relation Between Interest Rate Differentials and Expected Inflation Differentials

question 52

Multiple Choice

The relation between interest rate differentials and expected inflation differentials is called ______.

• A) forward parity
• B) interest rate parity
• C) relative purchasing power parity
• D) the international Fisher relation
• E) None of the above

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Definitions:

Certified Check

A check guaranteed by a bank, confirming that the drawer has enough funds to cover the amount.

Drawer

In financial terms, the party that writes or issues a check or draft instructing a payment to be made.

Rebate Check

A refund or discount on products or services, often sent to consumers in the form of a check after a purchase.

Bearer

A term referring to an individual or entity that possesses a negotiable instrument, like a check or bond, and has the right to receive the funds or assets it represents.