If interest rate parity does not hold, and the forward ____ is ____ the interest rate differential, then foreign financing with a simultaneous hedge of that position in the forward market results in higher financing costs than those of domestic financing
A) premium; higher than
B) discount; higher than
C) premium; less than
D) A and B

Question

Quizplus · Accepted Answer

The Answer of If interest rate parity does not hold, and the forward ____ is ____ the interest rate differential, then foreign financing with a simultaneous hedge of that position in the forward market results in higher financing costs than those of domestic financing
A) premium; higher than
B) discount; higher than
C) premium; less than
D) A and B

If Interest Rate Parity Does Not Hold, and the Forward