What kind of arbitrage occurs when the difference between two countries' interest rates is not equal to the forward discount/premium on their currencies?

What kind of arbitrage occurs when the difference between two countries' interest rates is not equal to the forward discount/premium on their currencies?

What kind of arbitrage occurs when the difference between two countries' interest rates is not equal to the forward discount/premium on their currencies?




A. two-point arbitrage
B. three-point arbitrage
C. covered interest
D. geographic arbitrage





Answer: C


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