Covered interest arbitrage is plausible when the forward premium reflect the interest rate differential between two countries specified by the interest rate parity formula.
举一反三
- The covered interest differential is _____ the sum of the forward premium on a currency and the interest rate differential.
- The __________ differential is approximately equal to the forward premium on a currency plus the interest rate differential. A: covered interest B: uncovered interest C: covered currency D: uncovered currency
- According to the interest rate parity theory, the forward currency of countries with a lower interest rate will appreciate.
- Which<br/>of these states that the difference in interest rates between two<br/>countries is equal to the percentage difference between the forward<br/>exchange rate and the spot exchange rate?() A: Arbitrage<br/>equilibrium B: Relative<br/>purchasing power parity C: Absolute<br/>purchasing power parity D: Interest<br/>rate parity E: Cross-rate<br/>parity
- The covered interest differential is _____ the sum of the forward premium on a currency and the interest rate differential. A: approximately equal to B: more than C: exactly equal to D: less than