The Act of Capitalizing on the Discrepancy Between the Forward

question 37

Multiple Choice

The act of capitalizing on the discrepancy between the forward rate premium and the interest rate differential is called ​

• A)triangular arbitrage.
• B)locational arbitrage.
• C)covered interest arbitrage.
• D)interest rate parity.

---

Definitions:

Extrinsic Motivation

Motivation that is driven by external rewards such as money, fame, grades, or praise.

Reinforcement Theory

A psychological theory suggesting that behavior is driven by its consequences, reinforcing desirable behaviors while discouraging undesirable ones.

Orienting Reflex

The instinctual reaction of an organism to a novel stimulus, often involving attention redirection towards the source of the stimulus.

Stimulus

Any event or situation that evokes a response or reaction from an organism or system.