Let the Expected Inflation in the United Sates Be 4

question 70

Multiple Choice

Let the expected inflation in the United Sates be 4% and the expected inflation in Costa Rica is 7.8 %; Also suppose that the United States one-year,risk-free rate is 5% what must the risk-free rate in Costa Rica be to maintain interest rate parity?

• A) 8.84%
• B) 8.19%
• C) 5.39%
• D) 12.80%

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Definitions:

Excess Supply

A market condition where the quantity of a product offered for sale by producers exceeds the quantity demanded by consumers.

Blu-Ray Disc Rentals

The service of providing Blu-Ray discs, which contain high-definition video content, for temporary use to customers for a fee.

Producing Online Movie Rentals

The business activity of offering movies for rent through internet platforms.

Cost To The Firm

The total expenses incurred by a company in producing goods or providing services.