Interest Rate Parity States That

question 41

Multiple Choice

Interest rate parity states that:

• A)relative forward exchange rates determine the relativity between the forward interest rate and the spot interest rate.
• B)relative spot exchange rates determine the relativity between the forward exchange rate and the forward interest rate.
• C)relative interest rates determine the relativity between the forward exchange rate and the spot exchange rate.
• D)relative forward exchange rates determine the relativity between the forward exchange rate and the spot interest rate.

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Definitions:

Universal Generalization

Universal generalization is a logical principle that allows one to infer that something is true for all members of a class from its being true for every observed member.

Quantifier Negation

The process of negating the quantifier in a logical expression, changing its scope or applying negation to the predicate instead.

Existential Generalization

A logical inference saying that if something is true for at least one member of a class, then it can be generalized to the class.

Universal Instantiation

A logical rule of inference that allows for the substitution of specific individual instances for universally quantified variables within a statement.