As a Rule, When the Interest Rate of the Foreign

question 27

Multiple Choice

As a rule, when the interest rate of the foreign currency is greater than the interest rate of the quoting currency,

• A)the outright forward rate is less than the spot exchange rate.
• B)the outright forward rate is more than the spot exchange rate.
• C)the currency will trade at a premium in the forward contract.
• D)none of the above

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Definitions:

Capitalism

An economic system based on private ownership of the means of production and their operation for profit, characterized by free markets, capital accumulation, and wage labor.

Primary Labor Market

Refers to sectors that offer stable, well-paid jobs, often with good working conditions and opportunities for advancement.

Social Barriers

Obstacles that exist within societies, which prevent individuals or groups from accessing resources, opportunities, or rights, contributing to inequality.

Conglomerates

Large corporations that operate in several industries at the same time.