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Which One of the Following Formulas Correctly Defines the Relationship

Question 236

Multiple Choice

Which one of the following formulas correctly defines the relationship to which it is associated?


A) Interest rate parity: (F1) /(S0) = (1 + RFC) (1 + RCDN)
B) Relative PPP: E(St) = [S0][1 + (hCDN - hFC) ]t
C) International Fisher effect: RCDN - hCDN = hFC - RFC
D) Uncovered interest rate parity: E(St) = [S0][1 + (RFC - RCDN) ]t
E) Unbiased forward rate: F3 = (S0)

Correct Answer:

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