If Interest Rate Parity Does Not Hold

question 38

Multiple Choice

If interest rate parity does not hold

• A)covered interest arbitrage opportunities will exist
• B)covered interest arbitrage opportunities will not exist
• C)arbitragers will be able to make risk-free profits
• D)A and C
• E)B and C

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Definitions:

Osmotic Pressure

The pressure required to prevent the flow of a pure solvent across a semipermeable membrane into a solution, related to the concentration of solutes.

Nephron Loop

Part of the kidney nephron extending from the proximal to the distal convoluted tubule, crucial in concentrating urine and reabsorbing water and salts.