Assume That the U

question 78

Multiple Choice

Assume that the U.S. interest rate is 10%, while the British interest rate is 15%. If interest rate parity exists, then:

• A) British investors who invest in the United Kingdom will achieve the same return as U.S. investors who invest in the U.S.
• B) U.S. investors will earn a higher rate of return when using covered interest arbitrage than what they would earn in the U.S.
• C) U.S. investors will earn 15% whether they use covered interest arbitrage or invest in the U.S.
• D) U.S. investors will earn 10% whether they use covered interest arbitrage or invest in the U.S.

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Definitions:

Interests Consideration

The act of taking into account various interests, preferences, and perspectives when making decisions or developing policies.

Basic Work Skills

Fundamental skills required for employment, including literacy, numeracy, communication, and problem-solving abilities.