All That Is Required for a Covered Interest Arbitrage Profit

question 31

True/False

All that is required for a covered interest arbitrage profit is for interest rate parity to not hold.

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Definitions:

Sale and Leaseback Arrangement

A financial transaction where one sells an asset and leases it back for the long term; thus, one continues to use the asset but no longer owns it.

Lessee

An individual or entity that leases or rents an asset from its owner, known as the lessor.

Captive Finance Company

Wholly owned subsidiary that handles credit extension and receivables financing through commercial paper.