If Covered Interest Arbitrage Opportunities Do Not Exist

question 26

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.
• E) interest rate parity holds, and arbitragers will be able to make risk-free profits.

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