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D Question 16 3 pts Which of the following statement is True If interest rate parity (IRP) exists, then the rate of return achieved from

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D Question 16 3 pts Which of the following statement is True If interest rate parity (IRP) exists, then the rate of return achieved from covered interest arbitrage should be equal to the rate available in the foreign country. Assume locational arbitrage is possible and involves two different banks. The realignment that would occur due to market forces would increase one bank's ask rate and would decrease the other bank's bid rate. Locational arbitrage involves investing in a foreign country and covering against exchange rate risk by engaging in forward contracts. Triangular arbitrage tends to force a relationship between the interest rates of two countries and their forward exchange rate premium or discount Capitalizing on discrepancies in quoted prices involving no risk and no investment of funds is referred to as interest rate parity

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