CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Uncovered interest rate parity assumes:
A. Future spot exchange rates follow a random walk.
B. Investors' expectations about future exchange rate movements, on average, are correct.
C. There is no arbitrage opportunity.
Explanation: It assumes investors are risk-neutral and their expectations are unbiased (correct on average).

C is true but it is not the assumption of the parity.

User Contributed Comments 0

You need to log in first to add your comment.