If the Interest Rate Is Higher in the U

question 95

Multiple Choice

If the interest rate is higher in the U.S. than in the United Kingdom, and if the forward rate of the British pound (in U.S. dollars) is the same as the pound's spot rate, then:

• A) U.S. investors could possibly benefit from covered interest arbitrage.
• B) British investors could possibly benefit from covered interest arbitrage.
• C) neither U.S. nor British investors could benefit from covered interest arbitrage.
• D) A and B

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Definitions:

Promotional Efforts

Activities and campaigns designed to increase awareness or sales of a product or service, typically involving advertising and marketing tactics.

Six-month Moving Average

A method of smoothing data by calculating the average of six consecutive months' worth of data, continuously updated month by month.

Mean Absolute Deviation

A statistical measure of the average absolute deviations of a set of values from their mean, indicating variability within the dataset.

Forecast Error

The difference between the actual outcomes and the predictions made by forecasting models.