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Which One of the Following Occurs When Interest Rate Parity

Question 36

Multiple Choice

Which one of the following occurs when interest rate parity exists between Countries A and B?


A) Country A investors are indifferent between risk-free investments in Countries A and B.
B) Forward exchange rates for Countries A and B must be equal for all time periods.
C) Risk-free interest rates in Countries A and B must be equal.
D) Spot and forward exchange rates between the currencies of the two countries must be equal.
E) Significant covered interest arbitrage opportunities between currencies of Countries A and B must exist.

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