The Principle of Interest Rate Parity Asserts That The

question 67

Multiple Choice

The principle of interest rate parity asserts that the:

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

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