Assume That the U

question 69

Multiple Choice

Assume that the U.S. investors are benefiting from covered interest arbitrage due to high interest rates on euros. Which of the following forces should result from the act of this covered interest arbitrage?

• A) downward pressure on the euro's spot rate.
• B) downward pressure on the euro's forward rate.
• C) downward pressure on the U.S. interest rate.
• D) upward pressure on the euro's interest rate.

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