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.
Ans: 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.
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Refer to Figure 3-4. At a price of $20, how many units will be sold?
A) 400 B) 500 C) 600 D) 800
If the market for products produced by firms in a monopolistically competitive industry becomes ________, then there will be ________ firms and each firm will produce ________ output and charge a ________ price
A) smaller; fewer; less; higher B) smaller; more; less; higher C) smaller; more; less; lower D) smaller; fewer; less; lower E) smaller; fewer; more; higher
If an asset has a 0.7 probability of yielding 10 percent and a 0.3 probability of yielding 20 percent, the expected yield of the asset is
A) 30 percent. B) 20 percent. C) 13 percent. D) 10 percent.
Average propensity to consume
A) is the same as the break-even point. B) gives the amount a person changes planned consumption for a change in real disposable income. C) is the amount of consumption that is independent of the level of disposable income. D) is the proportion of total disposable income that is consumed.