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.

---

Definitions:

Hypothesis Test

A statistical method used to decide if a certain premise about a population parameter is true, based on sample data.

Gas Company

A business entity that distributes gas, often natural gas or liquefied petroleum gas, to consumers and industries.

Starting Salaries

The initial compensation that an employee receives at the beginning of his or her career in a given position or job.

Business Graduates

Individuals who have successfully completed a degree program in business, encompassing areas such as finance, marketing, and management.