Which of the Following Variables Used in the Covered Interest

question 57

Multiple Choice

Which of the following variables used in the covered interest arbitrage formula are correctly defined?
I.R_FC:
Foreign country nominal risk-free interest rate
II.R_US:
U.S.real risk-free interest rate
III.F₁:
360-day forward rate
IV.S₀:
Current spot rate expressed in units of foreign currency per one U.S.dollar

• A)I and II only
• B)III and IV only
• C)I, III, and IV only
• D)II, III, and IV only
• E)I, II, III, and IV

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Definitions:

Stingy

Describing a person or behavior characterized by an unwillingness to spend money or use resources; being miserly or parsimonious.

Personal Unconscious

According to Carl Jung, the layer of the unconscious that houses material which is not within one's conscious awareness but is personal to the individual.

Repressed Thoughts

Unconscious defense mechanisms where distressing thoughts and memories are blocked from conscious awareness.

Undeveloped Ideas

Concepts or thoughts that have not been fully thought out, explored, or expanded upon to reach their potential understanding or application.