Arbitragers Applying Covered Interest Arbitrage Drive the International Currency and Money

question 2

Multiple Choice

Arbitragers applying Covered Interest Arbitrage drive the international currency and money markets toward the equilibrium described by:

• A) the effective exchange rate index.
• B) the purchasing power parity.
• C) the nominal effective exchange rate index.
• D) the interest rate parity.

---

Definitions:

Skin Pigmentation

The coloring of the skin caused by melanin production, affecting its tone and appearance.

Cortisol

A steroid hormone produced by the adrenal glands, involved in the body's response to stress and regulation of metabolism.

Steroid Hormone

A type of hormone derived from cholesterol, including androgens, estrogens, glucocorticoids, and mineralocorticoids, that regulates various bodily functions.

Carbohydrate

Organic compounds consisting of carbon, hydrogen, and oxygen, serving as a major energy source for the body; includes sugars, starches, and fibers.