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How many the following statements are true regarding the Interest Rate Parity (IRP)? If IRP holds then you can still make an arbitrage profit. When
- How many the following statements are true regarding the Interest Rate Parity (IRP)?
- If IRP holds then you can still make an arbitrage profit.
- When IRP does not hold, assume no transaction costs, there are opportunities for covered interest arbitrage.
- Relative to Purchasing Power Parity (PPP), IRP are violated (evidence against it) less often.
- IRP involves law of one price while PPP involves investing between countries.
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