If Covered Interest Arbitrage Opportunities Do Not Exist

question 45

Multiple Choice

If covered interest arbitrage opportunities do not exist,

• A)interest rate parity does not hold.
• B)interest rate parity holds.
• C)arbitragers will be able to make risk-free profits.
• D)interest rate parity does not hold, and arbitragers will be able to make risk-free profits.

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Definitions:

Ownership Structure

Ownership structure refers to the way in which the ownership of a company is divided among its shareholders, including the distribution of shares and voting rights.

Ownership Percentage

The share or portion of ownership an individual or entity holds in an asset or business, usually represented as a percentage.

Raw Materials

Unfinished goods or materials consumed in the manufacturing process to create a final product.

Currency Exchange Rates

The worth of a currency in exchange for a different currency.