Interest Rate Parity

question 318

Multiple Choice

Interest rate parity:

• A) Eliminates covered interest arbitrage opportunities.
• B) Exists when spot rates are equal for multiple countries.
• C) Means that the nominal risk-free rate of return must be the same across countries.
• D) Exists when the spot rate is equal to the futures rate.
• E) Eliminates exchange rate fluctuations.

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Definitions:

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