Today in the Spot Market $1 = 1

question 91

Multiple Choice

Today in the spot market $1 = 1.82 Swiss francs and $1 = 130 Japanese yen.In the 90-day forward market,$1 = 1.84 Swiss francs and $1 = 127 Japanese yen.Assume that interest rate parity holds worldwide.Which of the following statements is most CORRECT?

• A) Interest rates on 90-day risk-free U.S.securities are higher than the interest rates on 90-day risk-free Swiss securities.
• B) Interest rates on 90-day risk-free U.S.securities are higher than the interest rates on 90-day risk-free Japanese securities.
• C) Interest rates on 90-day risk-free U.S.securities equal the interest rates on 90-day risk-free Japanese securities.
• D) Since interest rate parity holds interest rates should be the same in all three countries.
• E) Interest rates on 90-day risk-free U.S.securities equal the interest rates on 90-day risk-free Swiss securities.

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Definitions:

Motivational Theory

A psychological framework that seeks to understand what drives individuals to initiate, direct, and persist in specific behaviors.

Behavioral Theory

A theory that focuses on observable behaviors, suggesting that all behaviors are learned through interaction with the environment.

Path-goal Theory

A leadership theory that suggests leaders should adjust their leadership style according to the situation to help followers achieve their goals and navigate obstacles.

Directive Behaviors

Leadership actions that involve giving explicit instructions and directions to followers, typically focusing on task accomplishment.