Covered Interest Arbitrage

question 7

Multiple Choice

Covered interest arbitrage

• A)ensures that currency futures prices are set correctly.
• B)ensures that commodity futures prices are set correctly.
• C)ensures that interest rate futures prices are set correctly.
• D)ensures that currency futures prices and commodity futures prices are set correctly.

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Definitions:

Causal Relationship

When one variable causes a change in another variable.

Explanatory Variables

Variables in a statistical model that are used to explain variations in the response variable.

Standard Deviation

A measure of the amount of variation or dispersion of a set of values, indicating how much the values deviate from the mean.

Measure Of Central Tendency

A statistical concept that provides a single value as an estimate of the center of a distribution of values, commonly calculated as the mean, median, or mode.