If the Interest Rate Is Lower in the United States

question 58

Multiple Choice

If the interest rate is lower in the United States than in the United Kingdom, and if the forward rate of the British pound is the same as its spot rate:

• A) U.S. investors could possibly benefit from covered interest arbitrage
• B) British investors could possibly benefit from covered interest arbitrage.
• C) neither U.S. nor British investors could benefit from covered interest arbitrage.
• D) U.S. investors could possibly benefit from covered interest arbitrage AND British investors could possibly benefit from covered interest arbitrage.

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Definitions:

Mass

Abnormal collection of tissue.

Benign Tumor

A non-cancerous growth in the body that does not invade nearby tissues or spread to other parts of the body.

Cyst

A closed pocket or pouch of tissue that can be filled with air, fluid, pus, or other material.

Overlapping Boundaries

Multiple sites of carcinoma without identifiable borders.