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Equally safe bonds pay 8 per cent in country A and 10 per cent in B. The interest rate differential is what?
A18 per cent
B1.25 per cent
C2 per cent
D0.8 per cent
Answer & Solution
Correct answer: C. 2 per cent
The differential is the gap between the two rates, 10 minus 8 which is 2 percentage points.
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