Which of the Following Statement Is False

question 19

Multiple Choice

Which of the following statement is false?

• A) If interest rate parity holds, foreign financing a simultaneous hedge of that position in the forward market will result in financing costs similar to those in domestic financing.
• B) If interest rate parity holds, and the forward rate is an accurate forecast of the future spot rate, uncovered foreign financing will result in financing costs similar to those in domestic financing.
• C) If interest rate parity holds, and the forward rate is expected to overestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing.
• D) If interest rate parity holds, and the forward rate is expected to underestimate the future spot rate, uncovered foreign financing is expected to result in lower financing costs than those in domestic financing.

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Definitions:

Otoliths

Small crystals in the inner ear that contribute to the sense of balance by responding to gravity and movement.

Organ of Corti

A structure located in the cochlea of the inner ear, containing hair cells that act as the primary sound receptor for auditory sensation.

Cochlea

A spiral-shaped cavity of the inner ear that plays a key role in the sense of hearing, converting sound vibrations into nerve impulses.

Malleus

A small bone in the middle ear that transmits sound vibrations from the eardrum to the incus.