Assume that Swiss investors are benefiting from covered interest arbitrage due to a high U.S. interest rate. Which of the following forces results from the act of this covered interest arbitrage?
A) upward pressure on the Swiss franc's spot rate.
B) upward pressure on the U.S. interest rate.
C) downward pressure on the Swiss interest rate.
D) upward pressure on the Swiss franc's forward rate.
Correct Answer:
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Q1: Assume the following information:
Q2: Assume the following bid and ask
Q3: Assume that a U.S. firm can invest
Q5: If interest rate parity exists, then _
Q6: When using _, funds are not tied
Q7: Assume that the U.S. investors are benefiting
Q8: If the interest rate is higher in
Q9: Based on interest rate parity, the larger
Q10: Assume the following information:
You have $1,000,000
Q11: When using _, funds are typically tied
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