Author Question: Because of the threat of arbitrage, the forward rate must equal the spot rate at all times. ... (Read 55 times)

londonang · **on:** Jun 30, 2018

Because of the threat of arbitrage, the forward rate must equal the spot rate at all times.

Indicate whether the statement is true or false

Question 2

The real exchange rate, q, is defined as

A) the price of the foreign basket in terms of the domestic one.
B) the price of the domestic basket in terms of the foreign one.
C) the price of the foreign basket.
D) the price of the domestic basket.
E) the nominal exchange rate in terms of the domestic basket.