Which of the Following Is NOT True with Respect to Interest

question 39

Multiple Choice

Which of the following is NOT true with respect to interest rate arbitrage?

• A) Interest rate arbitrage maintains the interest rate parity relationship.
• B) To arbitrage, you buy and sell something so that you have a positive investment and then earn a return on the transaction.
• C) It is rare that similar risk investments in one country earn more than another country after converting money to and from the foreign currency using spot and forward exchange rates.
• D) Arbitrageurs help exchange rates adjust to their correct levels rapidly and accurately.
• E) All of the above are true.

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