question archive The forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies is called: Not yet a Marked Flag Select one: a interest rate parity b
The forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies is called: Not yet a Marked Flag Select one: a interest rate parity b
Subject:AccountingPrice:2.87 Bought7
The forward rate differs from the spot rate by a sufficient amount to offset the interest rate differential between two currencies is called: Not yet a Marked Flag Select one:
a interest rate parity
b. covered interest arbitrage
c Triangular arbitrage
d. Locational arbitrage e none of these
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer is option a i.e Interest rate parity
b is wrong. Covered interest arbitrage is a strategy, used by the investor to cover the risk of exchange, by capitalizing interest rate difference between two countries by a forward contract.
c is wrong.Triangular arbitrage refers to the variation between three foreign currencies,when the exchange rates between them disagree.
d is wrong, Locational arbitrage is a strategy in which,the investor tries to make profit from the variations in exchange rate, for the same currency at banks in different locations.
