Based on Interest Rate Parity, the Larger the Degree by Which

question 36

Multiple Choice

Based on interest rate parity, the larger the degree by which the foreign interest rate exceeds the UK interest rate, the:

• A) larger will be the forward discount of the foreign currency.
• B) larger will be the forward premium of the foreign currency.
• C) smaller will be the forward premium of the foreign currency.
• D) smaller will be the forward discount of the foreign currency.

---

Definitions:

Trademark

A sign, term, or expression that is legally recognized or traditionally used to denote a corporation or merchandise.

Equity Method

Accounting for investments where the investing entity has significant influence, adjusting the investment value for earnings, losses, and dividends received.

Intercompany Profit

Profits generated from transactions between companies within the same corporate group, which may be eliminated during consolidation.

Net Increase/Decrease

This refers to the overall rise or fall in a particular financial metric or account over a specified period.