The Theoretical Forward Rate Implied by the Interest Rates and Spot

question 36

Multiple Choice

The theoretical forward rate implied by the interest rates and spot exchange rate can be expressed as ________.

• A)
• \(\mathrm{S}=\mathrm{F}\left(\frac{1-\mathrm{i}_{\mathrm{A}}}{1+\mathrm{i}_{\mathrm{B}}}\right)\)
• B)
• \(\mathrm{F}=\mathrm{S}\left(\frac{1+\mathrm{i}_{\mathrm{A}}}{1-\mathrm{i}_{\mathrm{B}}}\right)\)
• C)
• \(F=S\left(\frac{1+i_{A}}{1+i_{B}}\right)\)
• D)
• \(F=S\left(\frac{1-i_{A}}{1-i_{B}}\right)\)

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Definitions:

Inferential

Pertaining to inferential statistics, which involves making predictions or inferences about a population based on a sample of data.

Variability

The degree to which scores in a set of data are spread out or differ from each other.

Asymmetrical Distribution

A situation in statistical data where the values do not mirror each other across a central point.

Positively Skewed

A distribution where the majority of scores fall on the low end of the distribution and the asymmetrical tail extends into the positive side of the graph.