Question
Identify the one true statement about the covered interest parity (CIP) theory: a. CIP says that synthetic forward rates and direct forward rates should be
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Identify the one true statement about the covered interest parity (CIP) theory: a. CIP says that synthetic forward rates and direct forward rates should be equal. b. CIP is not reliable as it only takes into account the domestic interest rate. c. CIP always holds. d. CIP takes into account transaction costs. e. None of the suggested answers.
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Identify the one false statement about futures: a. Futures are traded on organised markets. b. Futures are standardised contracts. c. Futures have zero initial value.
d. Trading with futures will result in a margin call. e. Marking to market is a primitive version of daily re-contracting, where the
discounting is omitted.
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