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

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Definitions:

Operating Cash Flow (OCF)

A gauge of the funds generated from a corporation's standard operational processes.

Cash Flow

The total flows of capital into and out of a company, crucially determining its liquidity ratio.

Impairment Loss

A charge applied to a company's income statement when the fair value of an asset drops below its carrying value on the balance sheet.

Carrying Value

The recorded book value of an asset in a company's financial statements, calculated as the original cost minus accumulated depreciation or amortization.