If Interest Rate Parity (IRP) Exists, Then the Rate of Return

question 56

True/False

If interest rate parity (IRP) exists, then the rate of return achieved from covered interest arbitrage should be equal to the rate available in the foreign country.

---

Definitions:

Franchisor

Is a business entity that grants the right to use its trademark, business model, and operational system to an individual or entity (franchisee) in exchange for a franchise fee.

Disclosure Statement

A document outlining the critical information and terms of a financial transaction, often mandated by law to protect consumers.

Bulk Purchasing

The acquisition of goods or products in large quantities, often at a discounted price.

Profit Margins

A financial metric that measures the percentage of profit a company makes for each dollar of sales, indicating how effectively a company is managing its expenses relative to its net sales.