If Interest Rate Parity Exists, and Transaction Costs Do Not

question 34

Multiple Choice

If interest rate parity exists, and transaction costs do not exist, the money market hedge will yield the same result as the ____ hedge.

• A) put option
• B) forward
• C) call option
• D) None of these are correct.

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Definitions:

Guidelines

Recommendations or principles that suggest a course of action or provide direction in specific situations.

Throughputs

Processes or activities that transform inputs into outputs within a system or operation.

Inputs

Resources, information, or efforts contributed towards a process or system in order to achieve output.

Outputs

The final products, services, or results generated by a system, process, or activity.