Assume that interest rate parity holds, and the euro's interest rate is 9 percent while the U.S. interest rate is 12 percent. Then the euro's interest rate increases to 11 percent while the U.S. interest rate remains the same. As a result of the increase in the interest rate on euros, the euro's forward will in order to maintain interest rate parity.
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Ответ:
As a result of the increase in the interest rate on euros, the euro's forward PREMIUM will DECREASE in order to maintain interest rate parity.
Explanation:
The forward exchange rate is the currency exchange rate at which a bank or other financial institution agrees to exchange one currency for another in a specific future date. The forward premium represents a situation where the forward exchange rate is higher than the actual exchange rate.
In this case, since the euro's interest rate will increase by 2%, then its premium will decrease (future expected value will also decrease) so that the interest rate parity remains stable.
Ответ:
The FTC Act prohibits unfair or deceptive advertising in any medium. That is, advertising must tell the truth and not mislead consumers. A claim can be misleading if relevant information is left out or if the claim implies something that's not true.
Explanation: