If the Difference Between Forward and Spot Exchange Rates Is

question 79

Multiple Choice

If the difference between forward and spot exchange rates is positive,interest rate parity would predict that:

• A) the difference in interest rates between countries will be negative.
• B) the difference in interest rates between countries will be positive.
• C) there will be no difference in interest rates between countries.
• D) the difference will be quickly eliminated.

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Definitions:

AASB 9

The Australian Accounting Standards Board standard covering the classification, measurement, and derecognition of financial instruments.

IFRS 9

International Financial Reporting Standard 9, relating to financial instruments, covering their classification, measurement, impairment, and hedging.

Performance Obligation

A promise in a contract to transfer a good or service to a customer, which is a fundamental concept in revenue recognition.