Ask Question
BusinessBusiness
7 September, 22:49

The interest rate parity approximation formula is: Multiple Choice

Ft = S0 (1 - RFC/RUS) t.

Ft = S0[1 + RFC (RUS) ]t.

Ft = S0[1 + (RFC + RUS) ]t.

Ft = S0[1 + (RFC - RUS) ]t.

+2
Answers (1)
  1. 7 September, 23:05
    0
    Answer: Ft = S0 [1 + (RFC - RUS) ]t.

    Explanation: Interest rate parity eliminates covered interest arbitrage opportunities. As a no-arbitrage condition, it represents an equilibrium state under which investors are indifferent to interest rates available on bank deposits in two countries (that hedged returns from investing in different currencies should be the same, irrespective of their interest rates). It is particularly useful in foreign exchange markets, connecting interest rates, spot exchange rates and foreign exchange rates.

    The formula for approximating the interest rate parity is given as Ft = S0 [1 + (RFC - RUS) ]t.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “The interest rate parity approximation formula is: Multiple Choice Ft = S0 (1 - RFC/RUS) t. Ft = S0[1 + RFC (RUS) ]t. Ft = S0[1 + (RFC + ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Many different project life cycle models are used for different types of projects, such as information systems, improvement, research and development, and construction. a. True b. False
Answers (1)
Henry and claudia can claim alyssa for which tax benefits
Answers (1)
nitions : a. The party to a credit transaction who takes on an obligation/payable. b. The party who receives a receivable and will collect cash in the future. c. A written promise to pay a specified amount of money at a particular future date. d.
Answers (1)
Pioneer has developed a new consumer electronics item-a heterogeneous shopping product with unique patented features. it probably should use a marketing mix of:
Answers (1)
When you widen a column that results in excess row heights, you can eliminate the excess row height by:
Answers (1)
New Questions in Business
Jared runs a personal training studio, earning $5,000 last month. His fixed costs are $4,000, and his variable costs are $3,500. Should Jared shut down his business immediately? a) Yes, because he is clearly losing money.
Answers (1)
On January 1, a company issues bonds dated January 1 with a par value of $600,000. The bonds mature in 3 years. The contract rate is 7%, and interest is paid semiannually on June 30 and December 31. The bonds are sold for $564,000.
Answers (1)
Partridge Co. can further process Product J to produce Product D. Product J is currently selling for $21 per pound and costs $15.75 per pound to produce. Product D would sell for $37 per pound and would require an additional cost of $9.
Answers (1)
What is the largest source of income for banks? a. the interest they receive from loans b. fees charged to customers for accounts c. money deposited in savings accounts d. special accounts such as NOW accounts
Answers (1)
After committing to take a job offered by Acme Engineering brokered by the Career Center, a young engineer graduate is tempted to decommit and take a job offer from Nexus Industries.
Answers (1)
Home » Business » The interest rate parity approximation formula is: Multiple Choice Ft = S0 (1 - RFC/RUS) t. Ft = S0[1 + RFC (RUS) ]t. Ft = S0[1 + (RFC + RUS) ]t. Ft = S0[1 + (RFC - RUS) ]t.
Sign Up Forgot Password?