Suppose for Two Currencies the Forward Premium Is 4% and the Expected

question 11

Multiple Choice

Suppose for two currencies the forward premium is 4% and the expected premium is 8%.Then the risk premium is:

• A) -4%
• B) -2%
• C) 2%
• D) 4%

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Definitions:

Congressional Agreement

A consensus reached among members of the United States Congress on a legislative matter.

Outlays

Expenses incurred or amount spent for a particular purpose.

Federal Government Budget Surplus

Occurs when a government's income exceeds its spending during a fiscal year.

Aggregate Demand

The aggregate need for products and services throughout an economy, specified at a consistent price level and during a certain time.