If Interest Rate Parity Exists, the Attempt to Finance with a Foreign

question 25

Multiple Choice

If interest rate parity exists, the attempt to finance with a foreign currency while covering the position to avoid exchange rate risk will result in an effective financing rate that is ____ the domestic interest rate.

• A)lower than
• B)greater than
• C)similar to
• D)none of the above

---

Definitions:

Supernatural

Phenomena, entities, or forces beyond the natural world and not explained by current scientific understanding.

Collective Unconscious

A concept in Jungian psychology referring to the part of the unconscious mind that is shared among beings of the same species containing universal experiences.

Archetypes

Universal, symbolic images or themes that derive from the collective unconscious, as proposed by Jung, that appear across cultures and times.

Psychic Energy

A concept in psychoanalytic theory referring to the energy generated by the instinctual drives and desires of the id, distributed by the ego to manage reality and moral demands of the superego.