- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 5. The Impact of Balance of Payments Flows
CFA Practice Question
A high-yield currency's real value has a negative correlation with:
A. nominal yield spread (iH - iL).
B. expected inflation differential.
C. long-run equilibrium value of the high-yield currency.
Explanation: It has a negative correlation with expected inflation differential (
) and risk premium differential (
).
) and risk premium differential ().User Contributed Comments 0
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