Which One of the Following Formulas Correctly Defines the Relationship

question 231

Multiple Choice

Which one of the following formulas correctly defines the relationship to which it is associated?

• A) Interest rate parity: (F₁)/(S₀) = (1 + R_FC)(1 + R_CDN)
• B) Relative PPP: E(S_t) = [S₀][1 + (h_CDN - h_FC)]^t
• C) International Fisher effect: R_CDN - h_CDN = h_FC - R_FC
• D) Uncovered interest rate parity: E(S_t) = [S₀][1 + (R_FC - R_CDN)]^t
• E) Unbiased forward rate: F₃ = (S₀)

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