If the Interest Rate Is Lower in the U

question 94

Multiple Choice

If the interest rate is lower in the U.S. than in the United Kingdom, and if the forward rate of the British pound is the same as its spot rate:

• A) U.S. investors could possibly benefit from covered interest arbitrage.
• B) British investors could possibly benefit from covered interest arbitrage.
• C) neither U.S. nor British investors could benefit from covered interest arbitrage.
• D) A and B

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Definitions:

Time-Released

Refers to a method of delivering a substance (such as medication) in a manner that allows it to be released slowly and steadily into the bloodstream over time.

Agonist

A chemical or drug that binds to receptors in the body and activates them to produce a biological response.

Stimulates

To encourage something to grow, develop, or become active.

Pharmacodynamic

The branch of pharmacology concerned with the effects of drugs and the mechanism of their action in the body.