According to the Theory of Covered Interest Arbitrage,if the Interest

question 12

Multiple Choice

According to the theory of covered interest arbitrage,if the interest differential in favor of the foreign country exceeds the forward discount on the foreign currency,there will be a:

• A)capital inflow under covered interest arbitrage
• B)capital outflow under covered interest arbitrage
• C)no capital flow under a covered interest arbitrage
• D)any of the above

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