The Fisher equation holds that:
A) relative interest rates determine the relativity between the forward exchange rate and the spot exchange rate.
B) for any given interest rate,one currency will be set by the market such that it covers expected inflation and provides a real return.
C) the expected change in the exchange rate is due to differences in expected inflation rates in respective countries.
D) for any given currency,the nominal interest rate will be set by the market such that it covers expected inflation and provides a real return.
Correct Answer:
Verified
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