________ asserts that because a forward contract and a cash-and-carry strategy accomplish the same conversion, they must result in the same exchange rate.

Question

Quizplus · Accepted Answer

The concept described in the question is covered interest parity, which states that the return on a foreign investment should be equal to the return on a domestic investment, once exchange rate changes are taken into account. This means that a forward contract and a cash-and-carry strategy should have the same exchange rate outcome, as they both achieve the same conversion. The forward premium and forward discount puzzles refer to situations in which the actual exchange rate does not conform to the predictions of covered interest parity.

________ Asserts That Because a Forward Contract and a Cash-And-Carry