Based on Interest Rate Parity, the Larger the Degree by Which

question 46

Multiple Choice

Based on interest rate parity, the larger the degree by which the U.S. interest rate exceeds the foreign interest rate, the:​

• A) ​larger will be the forward discount of the foreign currency.
• B) ​larger will be the forward premium of the foreign currency.
• C) ​smaller will be the forward premium of the foreign currency.
• D) ​smaller will be the forward discount of the foreign currency.

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Definitions:

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