If the Covered Interest Differential Is Zero, Then

question 27

Multiple Choice

If the covered interest differential is zero, then:

• A)covered international investments will be profitable once we add in the interest earned on the foreign bonds.
• B)covered interest rate parity has not yet been reached.
• C)the overall covered return on a foreign-currency investment equals the return on a comparable domestic-currency investment.
• D)a currency is at a forward premium by as much as its interest rate is higher than the interest rate in the other country.

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Definitions:

Strategic Objectives

Specific, measurable goals that organizations set to guide their strategic plans and actions toward achieving their broader missions and visions.

Process Reengineering

A management strategy focusing on the analysis and design of workflows and processes within an organization to dramatically improve performance.

Increasing Efficiency

The process of improving the ability to achieve a higher output with the same or fewer resources, often through the optimization of processes.

Capacity for Change

The ability of an individual or organization to adapt to changes effectively and efficiently.