Which of These States That the Difference in Interest Rates

question 91

Multiple Choice

Which of these states that the difference in interest rates between two countries is equal to the percentage difference between the forward exchange rate and the spot exchange rate?

• A)Arbitrage equilibrium
• B)Relative purchasing power parity
• C)Absolute purchasing power parity
• D)Interest rate parity
• E)Cross-rate parity

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Definitions:

Likelihood

A statistical term that measures the probability of a particular outcome given a set of conditions or parameters.

Three-dimensional

Having or appearing to have length, breadth, and depth; often used to describe objects or images that have a perception of depth.

Fixation

An obsessive focus or attachment to someone or something, potentially causing psychological issues.

Arrangement

The act of organizing or placing things in a specific order or pattern.