According to Interest Rate Parity (IRP):​

question 35

Multiple Choice

According to interest rate parity (IRP) :​

• A) ​the forward rate differs from the spot rate by a sufficient amount to offset the inflation differential between two currencies.
• B) ​the future spot rate differs from the current spot rate by a sufficient amount to offset the interest rate differential between two currencies.
• C) ​the future spot rate differs from the current spot rate by a sufficient amount to offset the inflation differential between two currencies.
• D) ​the forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies.

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Definitions:

Proportion

A statistical measure indicating the fraction of a whole that is made up by a certain characteristic or subset.

Negatively Skewed

Refers to a distribution or data set where the tail is longer on the left side of the distribution's peak, indicating that the mass of the distribution is concentrated on the right.

Histogram

A graphical representation of the distribution of numerical data, using bars of different heights.

Representative

Term used to describe a subset or a sample that accurately reflects the larger population or dataset from which it is drawn.