With Covered Interest Arbitrage

question 48

Multiple Choice

With covered interest arbitrage:

• A) the market must be out of equilibrium.
• B) a "riskless" arbitrage opportunity exists.
• C) the arbitrageur trades in both the spot and future currency exchange markets.
• D) all of the above

---

Definitions:

Per Unit

Refers to a measurement or cost attributed to each individual unit of production or purchase.

Labor Efficiency Variance

The difference between the actual hours worked and the standard hours planned, multiplied by the labor rate.

January

The initial month in the Gregorian calendar, marking the start of the year.

Materials Quantity Variance

The financial difference between the actual quantity of materials used in production and the expected quantity, based on standard costs.