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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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