The term covered in covered interest arbitrage indicates

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If interest rate parity is satisfied and the interest rate in the U. S. is greater than the interest rate in Japan we can conclude that:

a) the yen trades at a forward premium

b) the yen trades at a forward discount.

The term “covered” in covered interest arbitrage indicates that:

a) the default risk is insured.

b) there is no exchange rate risk exposure.

Reference no: EM131511602

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