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

question 46

Multiple Choice

Based on interest rate parity, the larger the degree by which the U.S. interest rate exceeds the foreign 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.

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Definitions:

Neuron

A specialized cell transmitting nerve impulses; a nerve cell, which is the basic building block of the nervous system.

Neurotransmitters

Chemical substances in the brain and nervous system that facilitate communication between nerve cells.

Terminal Buttons

The small knobs at the end of an axon that release chemical signals from the neuron into the synapse.

Synapse

The junction between two nerve cells where impulses pass by diffusion of neurotransmitters.