When a Foreign Interest Rate Is Higher Than a Domestic

question 17

Multiple Choice

When a foreign interest rate is higher than a domestic interest rate,the foreign currency's forward rate will be less than its spot rate.That means that:

• A)the value of the foreign currency is expected to decline in the future.
• B)the value of the foreign currency is expected to increase in the future.
• C)the foreign interest rate is expected to increase in the future.
• D)the foreign interest rate is expected to decline in the future.

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Definitions:

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The use of instruments to measure and analyze the physical and chemical properties of substances.

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