Differences between the term structure of interest rates in two countries will reflect
A) price levels.
B) GNP differences expected.
C) the absence of covered interest arbitrage.
D) expected exchange rate changes.

Question

Quizplus · Accepted Answer

Differences in the term structure of interest rates between two countries often reflect expected changes in exchange rates, as investors anticipate currency value shifts that could affect returns.

Differences Between the Term Structure of Interest Rates in Two