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:

Father's Line

Patrilineage; tracing lineage or inheritance through the male line from a common ancestor.

Kin Group

A social unit consisting of family members and relatives who share a common ancestry and are bound by social ties.

Direct Line of Descent

A familial lineage tracing directly down (or up) through generations, such as from parent to child, without regard to gender.

Surname

A family name passed down from generation to generation, often used in conjunction with a given name to identify a specific individual.