Let R_US Be the Annual Risk-Free Rate in the United

question 20

Multiple Choice

Let R_US be the annual risk-free rate in the United States, R_J be the risk-free rate in Japan, F be the futures price of $/yen for a 1-year contract, and E the spot exchange rate of $/yen. Which one of the following is true?

• A) If R_US > R_J, then E < F.
• B) If R_US < R_J, then E < F.
• C) If R_US > R_J, then E > F.
• D) If R_US < R_J, then F = E.
• E) There is no consistent relationship that can be predicted.

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Definitions:

Effort And Performance

This refers to the relationship between the amount of effort put into a given task and the resulting performance level, highlighting the direct impact effort has on outcomes.

Relationship

A connection, association, or involvement between two or more entities, often characterized by a level of emotional or social linkage.

Equity Model

A theory that suggests fairness in the workplace is achieved when the ratio of inputs to outcomes is balanced among employees.

Positives

Positives refer to the favorable aspects or outcomes associated with a situation, decision, or action.