Currently,a U

question 34

Multiple Choice

Currently,a U.S.trader notes that in the 6-month forward market,the Japanese yen is selling at a premium (that is,you receive more dollars per yen in the forward market than you do in the spot market) ,while the British pound is selling at a discount.Which of the following statements is CORRECT?

• A) If interest rate parity holds,6-month interest rates should be the same in the U.S. ,Britain,and Japan.
• B) If interest rate parity holds among the three countries,the United States should have the highest 6-month interest rates and Japan should have the lowest rates.
• C) If interest rate parity holds among the three countries,Britain should have the highest 6-month interest rates and Japan should have the lowest rates.
• D) If interest rate parity holds among the three countries,Japan should have the highest 6-month interest rates and Britain should have the lowest rates.
• E) If interest rate parity holds among the three countries,the United States should have the highest 6-month interest rates and Britain should have the lowest rates.

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Definitions:

Medusa

Among cnidarians, bell-shaped body form that is directed downward and contains much mesoglea.

Polyp

Among cnidarians, body form that is directed upward and contains much mesoglea. In anatomy: small, abnormal growth that arises from the epithelial lining.

Proglottids

Segments that make up the body of tapeworms, each capable of reproducing sexually.

Cercariae

The larval stage of certain parasitic flatworms belonging to the class Trematoda, which is released from the intermediate host and seeks out the definitive host in which it will mature.