Which of the Following Quotations Best Describes Interest Rate Parity

question 53

Multiple Choice

Which of the following quotations best describes interest rate parity in action?

• A)"The demand for the Canadian dollar has increased due to the recent increase in the Canadian interest rate."
• B)"The market feeling is that the Canadian dollar is overvalued and will likely appreciate."
• C)"The price of bananas is the same in Canada and the United States, adjusting for the exchange rate."
• D)"The expected appreciation of the Canadian dollar is currently lowering demand for it."
• E)none of the above

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