The Implied Foreign Interest Rate Computed Using Spot and Forward

question 98

Multiple Choice

The implied foreign interest rate computed using spot and forward exchange rates may be lower than the actual foreign interest rate if the foreign country has a high

• A)depreciation risk.
• B)inflation risk.
• C)default risk.
• D)none of the above

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Definitions:

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A fundamental method of solving problems characterized by repeated, varied attempts until success or a solution is achieved.

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