Which of the following is not true regarding covered interest arbitrage?
A) Covered interest arbitrage is a reason for observing interest rate parity (IRP).
B) If the forward rate is equal to the spot rate, conducting covered interest arbitrage will yield a return that is exactly equal to the interest rate in the foreign country.
C) When interest rate parity holds, covered interest arbitrage is not possible.
D) When interest rate disparity exists, covered interest arbitrage may not be profitable.
E) All of the above are true.

Question

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The Answer of Which of the following is not true regarding covered interest arbitrage?
A) Covered interest arbitrage is a reason for observing interest rate parity (IRP).
B) If the forward rate is equal to the spot rate, conducting covered interest arbitrage will yield a return that is exactly equal to the interest rate in the foreign country.
C) When interest rate parity holds, covered interest arbitrage is not possible.
D) When interest rate disparity exists, covered interest arbitrage may not be profitable.
E) All of the above are true.

Which of the Following Is Not True Regarding Covered Interest