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:

Distribution

The way in which something is shared out among a group or spread over an area, or the set of all possible values of a variable and how frequently they occur.

P-value

The probability of observing a test result at least as extreme as the one observed, under the assumption that the null hypothesis is true.

Kruskal-Wallis Test

The Kruskal-Wallis test is a non-parametric method for testing whether samples originate from the same distribution, used when the assumptions of one-way ANOVA are not met.

Hypotheses Testing

A statistical method that uses sample data to evaluate a hypothesis about a population parameter, typically involving a test statistic to determine the likelihood of the hypothesis being true.