The Nominal Interest Rate Parity Condition States That

question 38

Multiple Choice

The nominal interest rate parity condition states that

• A)domestic and foreign assets must have nominal returns that are identical, irrespective of the characteristics of the assets.
• B)when domestic and foreign assets have identical risk, liquidity, and information characteristics, their nominal returns must also be identical.
• C)while nominal returns are equalized across all foreign and domestic assets, real returns may vary widely.
• D)while real returns are equalized across all foreign and domestic assets, nominal returns may vary widely.

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