If interest rate parity exists, and the forward rate is an accurate forecast of the future spot rate:
A) an uncovered investment in a foreign deposit is not worthwhile.
B) an investment in a foreign deposit will earn a higher effective yield than an investment in a domestic deposit.
C) an investment in a foreign deposit will be worthwhile if the foreign inflation rate exceeds the domestic inflation rate.
D) None of these are correct.
Correct Answer:
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