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8. Theoretical Relationship # 4: Interest Rates and Exchange Rates; Interest Rate Parity A. Illustrate the concept of 'Interst Rate Parity' [IRP] and 'Covered Interest

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8. Theoretical Relationship # 4: Interest Rates and Exchange Rates; Interest Rate Parity A. Illustrate the concept of 'Interst Rate Parity' [IRP] and 'Covered Interest Arbitrage' with a numerial example of your own. B. What is Currency Carry-Trade? Explain using your own example. What are the popular global carry-trade strategies? What are its inherent risks? C. What are the implications of IRP and Carry-Trade, for Foreign Exchange Market

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