Part II Marks 60 1. Which of the following statements is correct regarding the covered interest parity condition? A: Spot and forward exchange rates tend to diverge, in general, to be precisely in line B: The domestic interest rate must be higher or lower than the foreign interest rate by C: The domestic interest rate must be lower (higher) than the foreign interest rate by D: All of the above statements are correct E: A and C are correct with the interest differential. the extent the domestic currency is anticipated to depreciate or appreciate. the extent the domestic currency sells at a discount (premium)