Hi,

Could you please help me answer the 4 questions below? I need the correct answer, and if possible, a brief explanation. Thanks very much :)

t=7039549&cmid=228848# com IE Question 5 We would generally expect covered interest rate parity to exist in markets, but when we have covered interest arbitrage: Select one: A. the arbitrageur trades only in the spot currency exchange markets. B. the arbitrageur trades only in the forward currency exchange markets. C. all of the above are true. D. the market must be out of equilibrium. Question 6 Differential rates of inflation between two countries are thought by a number of prominent academics and market players to be: Select one: A. offset over time through the effect of relative Purchasing Power Parity. B. offset immediately through the effects of absolute Purchasing Power Parity. C. offset over time through the effects of absolute Purchasing Power Parity. D. offset immediately through the effect of relative Purchasing Power Parity.Question 7 Purchasing power parity can be defined as: Select one: A. an economic theory stating that the expected disparity between the exchange rate of two currencies is approximately equal to the difference between their countries' nominal interest rates. B. an economic concept that states that the price of an identical asset or commodity will have the same price globally, regardless of location. C. a measurement of prices in different countries that uses the prices of specific goods to compare the absolute purchasing power of the countries' currencies. D. the combination of the anticipated rate of inflation and the real rate of return are represented in the nominal interest rates. Question 8 A country whose currency has weakened more than justified by inflation differentials to another country's currency is said to be in terms of Purchasing Power Parity. Select one: A. over-compensating B. overvalued C. under-compensating D. undervalued