If a Foreign Country's Interest Rate Is Similar to the UK

question 1

Multiple Choice

If a foreign country's interest rate is similar to the UK rate, the forward rate premium or discount will be ____, meaning that the forward rate and spot rate will provide ____ forecasts.

• A) substantial; similar
• B) substantial; very different
• C) close to zero; similar
• D) close to zero; very different

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Definitions:

Semantic

Relating to meaning in language or logic, especially the analysis of word meanings and relationships.

Phonemic

Pertains to phonemes, which are the smallest units of sound in a language that distinguish one word from another.

Structural

Relates to the physical or organizational shape, composition, or arrangement of something.

Episodic

Pertaining to events or incidents that occur in separate, distinct episodes, often relating to memory in psychology.