Triangular Arbitrage Tends to Force a Relationship Between the Interest

question 66

True/False

Triangular arbitrage tends to force a relationship between the interest rates of two countries and their forward exchange rate premium or discount.

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Definitions:

P/E

Price-to-Earnings ratio, a valuation metric that compares a company's market share price to its per-share earnings, used to assess if a stock is over or under-valued.

Free Cash Flow

Cash generated by a company's operations minus capital expenditures, indicating the amount of cash a company can distribute to shareholders or reinvest.

Net Debt

The total debt of a company minus its cash and cash equivalents, indicating the actual debt burden on the company.

Cost of Equity

The return that a company requires to decide if an investment meets capital return requirements and is often used in financial modeling for valuing a company.