题目内容

Whereas under flexible exchange rates, the nation has no control over its money supply in the long run, under fixed exchange rate system, the nation retains dominant control over its money supply and domestic monetary policy. ()

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Arbitrage refers to the purchase of a currency in the monetary center where it is cheaper, for immediate resale in the monetary center where it is more expensive, in order to make a profit. ()

A forward transaction involves an agreement today to buy or sell a specified amount of a foreign currency at the forward rate. ()

If the forward rate is above the present spot rate, the foreign currency is said to be at a forward discount with respect to the domestic currency. ()

If the positive interest rate differential in favor of a foreign monetary center is 4 percent per year and the foreign currency is at a forward discount of 3 percent per year, roughly how much would an interest arbitrageur earn from the purchases of foreign three-month treasure bills if he or she covered the foreign exchange risk? ( )

A. 4%
B. 3%
C. 1%
D. 7%

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