Covered interest arbitrage involves both
A) the purchase of a foreign asset and a forward contract in the market for foreign exchange.
B) the purchase of a domestic asset and a spot contract in the market for foreign exchange.
C) the sale of a foreign asset and the purchase of a forward contract in the market for foreign exchange.
D) the sale of domestic stocks and the purchase of foreign bonds.
A
You might also like to view...
Sharon works for a company that provides a 2% match if she puts 6% of her income into a 401(k) retirement account. What will this investment model mean for her future retirement income?
a. Because this investment is made in pretax dollars, Sharon’s current taxable income will be lower. b. Her taxable income will be higher now, but she will be eligible for 401(k) tax breaks when she retires. c. Because this investment is made in pretax dollars, her retirement account will earn more money for the future. d. Because of the company match, Sharon will need to roll her 401(k) over into an IRA before retirement to take advantage of any tax benefit.
Suppose there are no borrowing constraints but the individual wishes to leave a bequest of $120,000 (after adjusting for inflation) to heirs. Then annual consumption should be
Consider an individual who enters adulthood and the labor force at age 18, expects to work 5 years at a real income of $10,000 per year, anticipates earning a real income of $40,000 per year from age 23 to 63, expects to retire with a $10,000 annual pension, and live until age 78. Suppose the interest rate is zero, and the individual seeks perfectly smooth consumption across his adult lifetime. a) $12,000 b) $16,000 c) $20,000 d) $24,000 e) $28,000
In 2007, investment in France increased by 7 billion euros. Which of the following occurs?
I. an upward shift in the AE curve II. a leftward shift in the AD curve III. an increase in the price level and real GDP in the short run IV. an increase in the price level and no change in real GDP in the long run. a) I, II, III, & IV b) I & III only c) I, II, & IV only d) III & IV only
"A firm cannot experience both economies of scale and diminishing marginal product." Do you agree or disagree? Why?
What will be an ideal response?