CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Uncovered interest rate parity states that:

I. The expected currency differential should offset the inflation differential between the two countries.
II. The expected interest differential should offset the inflation differential between the two countries.
III. The expected inflation differential should offset the currency differential between the two countries.
IV. The expected currency differential should offset the interest differential between the two countries.
Correct Answer: IV only

User Contributed Comments 2

User Comment
danlan2 I, III: PPP
II: international fisher
jimmyvo PPP = fx prices & inflation
International fisher = interest & inflation
Uncovered interest rate parity = fx price & interest
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