Which of the Following Statements Is False

question 35

Multiple Choice

Which of the following statements is false?

• A) If interest rate parity exists, covered interest arbitrage is not worthwhile.
• B) If interest rate parity holds and the forward rate is an accurate forecast of the future spot rate, an uncovered investment in a foreign security is not worthwhile.
• C) If interest rate parity exists and the forward rate is an unbiased forecast of the future spot rate, an uncovered investment in a foreign security will on average earn an effective yield similar to an investment in a domestic security.
• D) If interest rate parity exists and the forward rate is expected to underestimate the future spot rate, an uncovered investment in a foreign security is expected to earn a lower effective yield than an investment in a domestic security.

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Definitions:

Studio Practices

Refers to the standardized methods and procedures employed by film studios for the production, marketing, and distribution of movies.

Common Usage

The general and widespread use or practice of words, phrases, or terms within a language or culture.

Assembly-Line Model

A manufacturing process in which parts are added to a product in a sequential manner to create a finished product more efficiently.

Silent Comedian

A performer who specializes in comedy without the use of spoken word, often associated with the silent film era.