​If Interest Rate Parity Exists and the Forward Rate Is

question 7

Multiple Choice

​If interest rate parity exists and the forward rate is expected to overestimate the future spot rate, then uncovered foreign financing is expected to result in an effective financing rate that will be:

• A) ​similar to the U.S. financing rate.
• B) ​lower than the U.S. financing rate.
• C) ​higher than the U.S. financing rate.
• D) ​lower than the U.S. interest rate if the forward rate exhibits a discount and higher than the U.S. interest rate if the forward rate exhibits a premium.

---

Definitions:

Annually

Referring to something that occurs once every year.

Euthanize

The act of humanely ending the life of a living being, typically to relieve severe pain or suffering, often referred to in the context of animals.

Veterinarians

Medical professionals who practice veterinary medicine, diagnosing and treating diseases, disorders, and injuries in animals.

Coping Mechanisms

Strategies that individuals employ to manage stressful situations, emotions, and to mitigate personal and psychological conflicts.