In Equilibrium, the Interest Parity Condition Requires That

question 148

Multiple Choice

In equilibrium, the interest parity condition requires that:

• A) all rates of returns will equalize.
• B) all spot and forward rates will equalize.
• C) the home interest rate minus its expected rate of currency depreciation (against the foreign country) will equal the foreign interest rate on similar assets.
• D) all rates of returns and forward rates will equalize.

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