Which of the statements below is TRUE?

Question

Quizplus · Accepted Answer

The formula for calculating the Forward Indirect Rate is: Forward Indirect Rate = Current Indirect Rate x [(1 + Interest Rate of the Base Currency)/(1 + Interest Rate of the Quote Currency)]. Therefore, statement B is true. Statement A is incorrect because spot rates are based on the current exchange rate between two currencies, not interest rates. Statement C is incorrect because there are ways to lock in future currency exchange rates, such as through forward contracts or options. Statement D is incorrect because the International Fisher Effect suggests that differences in nominal interest rates between countries are driven by differences in expected inflation rates, not that inflation rates are necessarily the same across all countries.

Which of the Statements Below Is TRUE