If the Interest Rate Differential Between Two Countries Is Equal

question 331

Multiple Choice

If the interest rate differential between two countries is equal to the percentage difference between the forward and the spot exchange rates then _____ parity exists.

• A) Forward rate.
• B) Absolute purchasing power.
• C) Uncovered interest.
• D) International rate.
• E) Interest rate.

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Definitions:

Direct

In financial and business contexts, this term refers to a method or approach that involves straight interaction without intermediary channels, often used in marketing to describe direct communication or sales to customers.

NCI Allocation

Refers to the distribution of Net Current Assets among various parties or accounts, primarily focusing on how non-controlling interest (NCI) is allocated in consolidated financial statements.

Equity Account

An account that represents the owner's interest in a company's assets, typically reflecting the amount of funds that remain for the owners after all liabilities have been subtracted.

Non-controlling Interest

A minority shareholding of less than 50% in a subsidiary's equity, not giving the shareholder the controlling interest in the subsidiary's financial and operational policies.