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21. Interest rate parity: exists when spot rates are equal for multiple countries. means that the nominal risk-free rate of return must be the same

21.

Interest rate parity:

exists when spot rates are equal for multiple countries.

means that the nominal risk-free rate of return must be the same across countries.

eliminates exchange rate fluctuations.

exists when the spot rate is equal to the forward rate.

eliminates covered interest arbitrage opportunities.

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