tailieunhanh - Chapter 05: International Parity Relationships and Forecasting Foreign Exchange

Chapter 05 "International Parity Relationships and Forecasting Foreign Exchange" consisting of multiple choice quiz questions to help you strengthen their knowledge and familiarity with multiple choice quiz format. | Chapter 06 International Parity Relationships and Forecasting Foreign Exchange Chapter 05 International Parity Relationships and Forecasting Foreign Exchange Multiple Choice Questions 1. An arbitrage is best defined as A. A legal condition imposed by the CFTC B. The act of simultaneously buying and selling the same or equivalent assets or commodities for the purpose of making reasonable profits C. The act of simultaneously buying and selling the same or equivalent assets or commodities for the purpose of making guaranteed profits D. None of the above 2. Interest Rate Parity IRP is best defined as A. When a government brings its domestic interest rate in line with other major financial markets B. When the central bank of a country brings its domestic interest rate in line with its major trading partners C. An arbitrage condition that must hold when international financial markets are in equilibrium D. None of the above 3. When Interest Rate Parity IRP does not hold A. there is usually a high degree of inflation in at least one country B. the financial markets are in equilibrium C. there are opportunities for covered interest arbitrage D. b and c 4. Suppose you observe a spot exchange rate of . If interest rates are 5 APR in the . and 3 APR in the euro zone what is the no-arbitrage 1-year forward rate A. B. C. D. 6-1 Chapter 06 International Parity Relationships and Forecasting Foreign Exchange 5. Suppose you observe a spot exchange rate of . If interest rates are 3 APR in the . and 5 APR in the euro zone what is the no-arbitrage 1-year forward rate A. B. C. D. 6. Suppose you observe a spot exchange rate of . If interest rates are 5 APR in the . and 2 APR in the . what is the no-arbitrage 1-year forward rate A. B. C. D. 7. A formal statement of IRP is F _1 Zt A. c1 F _l e B. MS 1 s F - 5 _ 1 z C. 1 - F -S zt-4 . Short Answer Questions Exchange Rate Interest