Which of the Following Reasons Explain Why Interest Rate Parity

question 56

Multiple Choice

Which of the following reasons explain why interest rate parity may not hold perfectly?
I.Banking practices
II.Government controls
III.Business loan risk
IV.Varying expectations

• A) I only
• B) II only
• C) II and IV
• D) I, III, and IV

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Definitions:

Sales

The total revenue earned from the selling of goods or services, before any deductions are made.

Charge Customer

To bill a customer for goods or services provided, thereby creating an account receivable.

Cash Discount

A deduction from the invoice price that is allowed if payment is made within a specified period.

Credit

An accounting entry recording an increase in liabilities or equity or a decrease in assets, opposite of a debit.