The interest rate parity formula can be written as (I). (1 + c) = (1 + Kdomestic)/ (1 + Kforeign) (II). (1 + Kforeign) (1 + Kdomestic) = (1 + c) (III). (1 + c) (1 + Kdomestic) = (1 + Kforeign) (IV). (1 + c) - (1 + Kdomestic) = (1 + Kforeign)

Question 25 options:

a) II

b) III

c) I

d) IV