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International Financial Management Study Set 1
Quiz 8: Relationships among Inflation, Interest Rates, and Exchange Rates
37
Question 37
True False
37.If interest rate parity holds, then the international Fisher effect must hold.
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Q 38
38)Which of the following theories suggests that the percentage change in spot exchange rate of a currency should be equal to the inflation differential between two countries? A) purchasing power parity (PPP). B) triangular arbitrage. C) international Fisher effect (IFE). D) interest rate parity (IRP).
Q 39
39)Which of the following theories suggests that the percentage difference between the forward rate and the spot rate depends on the interest rate differential between two countries? A) purchasing power parity (PPP). B) triangular arbitrage. C) international Fisher effect (IFE). D) interest rate parity (IRP).
Q 40
40)Which of the following theories can be assessed using data that exists at one specific point in time? A) purchasing power parity (PPP) B) international Fisher effect (IFE). C) A and B D) interest rate parity (IRP).
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