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Under Which of These Conditions Will Outward Uncovered Arbitrage Be

Question 35

Multiple Choice

Under which of these conditions will outward uncovered arbitrage be profitable?


A) The foreign interest rate is lower than the domestic interest rate, and the foreign currency appreciates by more than the interest differential
B) The foreign interest rate is higher than the domestic interest rate, and the foreign currency depreciates by more than the interest differential
C) The foreign interest rate is less than the domestic rate, and the domestic currency stays unchanged
D) The foreign interest rate is higher than the domestic interest rate, and the foreign currency depreciates by a percentage which is equal to the interest differential

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