Which of the Following Statements Is True

question 33

Multiple Choice

Which of the following statements is true?

• A)The implications of the interest rate parity theorem is that in a competitive market for deposits, loans and foreign exchange, the potential profit opportunities from overseas investment for the FI manager are likely to be large.
• B)The implications of the interest rate parity theorem is that in a competitive market for deposits, loans and foreign exchange, the potential profit opportunities from overseas investment for the FI manager are likely to be non-existent.
• C)The implications of the interest rate parity theorem is that in a competitive market for deposits, loans and foreign exchange, the potential profit opportunities from overseas investment for the FI manager are likely to be small.
• D)None of the listed options are correct.

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Definitions:

Time Value

The principle that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a bond or stock certificate.

Fair Value

The cost incurred or received during the sale of an asset or transfer of a liability in a systematic transaction among market actors on the valuation date.