Which of the Following Statements Is False

question 21

Multiple Choice

Which of the following statements is false?

• A) The covered interest parity equation states that the difference between the forward and spot exchange rates is related to the interest rate differential between the currencies.
• B) By entering into a currency forward contract, a firm can lock in an exchange rate in advance and reduce or eliminate its exposure to fluctuations in a currency's value.
• C) When the interest rate differs across countries, investors have an incentive to borrow in the low-interest rate currency and invest in the high interest rate currency.
• D) A currency forward is usually written between two firms, and it fixes a currency exchange rate for a transaction that will occur at a future date.

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Definitions:

Shakers

A religious sect known for their communal living, celibate lifestyle, and rhythmic worship practices, originating in the 18th century England and later establishing communities in America.

Ann Lee

A religious leader known for founding the Shakers, a Christian sect that emphasized simple living, celibacy, and communal living, in the late 18th century.

Market Revolution

A period of significant change in the United States during the early 19th century, characterized by the rapid expansion of capitalism and the development of a national market economy.

Cooperative Basis

A foundational principle for organizations or enterprises that are owned and run jointly by their members, who share the profits or benefits.