You Have Equal Amounts of Money Invested in a Risk-Free

question 2

Multiple Choice

You have equal amounts of money invested in a risk-free dollar-denominated investment and borrowed at the rate paid on the British pound.If you can earn a return during this,you have shown:

• A) Interest rate arbitrage.
• B) Interest rate parity
• C) Purchasing power arbitrage
• D) Purchasing power parity

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Definitions:

Equipment Sale

The process of selling off business equipment, often used machinery or vehicles, either to raise funds or dispose of assets no longer needed.

Land Purchase

The acquisition of land as a fixed asset with the intent of using it for business operations or investment purposes.

Accounts Payable

Money owed by a company to its creditors for goods and services that have been received but not yet paid for.

Inventory

Goods or materials that a business holds for the purpose of resale or production.