The Theory That the Annual Percentage Differential in the Forward

question 76

Multiple Choice

The theory that the annual percentage differential in the forward market for a currency quoted in terms of another currency is equal to the approximate difference in the interest rates between two countries is known as:

• A) covered interest arbitrage.
• B) the Fisher equation.
• C) a forward rate agreement.
• D) interest rate parity.

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Definitions:

Consequences

Consequences refer to the outcomes, effects, or repercussions of actions or decisions, which may influence future behavior or circumstances.

Behavior

Actions or reactions of an individual or group in response to external or internal stimuli.

Remittitur

A court-ordered reduction of an excessive jury verdict in a civil case.

Trial Court

The court where a case is initially tried, involving presentation of evidence and witness testimony before a judge or jury for a verdict.