Assume the following information: U.S. investors have $1,000,000 to invest:
Given this information:
A) interest rate parity exists and covered interest arbitrage by U.S. investors results in the same yield as investing domestically.
B) interest rate parity doesn't exist and covered interest arbitrage by U.S. investors results in a yield above what is possible domestically.
C) interest rate parity exists and covered interest arbitrage by U.S. investors results in a yield above what is possible domestically.
D) interest rate parity doesn't exist and covered interest arbitrage by U.S. investors results in a yield below what is possible domestically.
Correct Answer:
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