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QuesLUIIJ J. Punis) Yavu Which of the following is/are false regarding the movement of the cross exchange rate between currency A and currency B? 1.
QuesLUIIJ J. Punis) Yavu Which of the following is/are false regarding the movement of the cross exchange rate between currency A and currency B? 1. If currencies A and B move by the same degree against the dollar, there is no change in the cross exchange rate. II. When currency A depreciates against the dollar, while currency B is unchanged against the dollar, currency A appreciates against currency B by the same degree as it appreciates against the dollar. W. When currency A appreciates against the dollar by a smaller degree than currency B does, then currency A appreciates against B. IV. When currency A appreciates against the dollar by a smaller degree than currency B does, then currency A depreciates against B. II and IV I and IV OI, I and III I and III II and III Question 4 (3.33 points) Saved Which of the following is/are true? According to interest rate parity (IRP), the forward rate differs from the spot rate by a sufficient amount to offset the inflation differential between two currencies Assume that the German investors are benefiting from covered interest arbitrage due to high interest rates on British pounds, the act of this covered interest arbitrage would put an upward pressure on British pound's forward rate. Assume that the German investors are benefiting from covered interest arbitrage due to high interest rates on British pounds, the act of this covered interest arbitrage would put an upward pressure on British pound's spot rate If the interest rate is lower in the US than in the United Kingdom, and if the forward rate of the British pound is the same as its spot rate, British investors could possibly benefit from covered interest arbitrage
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