Uncovered Interest Rate Parity (UIP) can best be defined as:
A) The condition stating that the interest rate differential between two countries is equal to the difference between the forward exchange rate and the spot exchange rate.
B) The condition stating that the current forward rate is an unbiased predictor of the future exchange rate.
C) The condition stating that the expected percentage change in the exchange rate is equal to the difference in interest rates.
D) The theory that real interest rates are equal across countries.
E) The risk related to having international operations in a region where currency values vary.
Correct Answer:
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