Covered interest arbitrage ensures that the ratio of forward to spot exchange rates is determined by the inflation differential between two currencies.
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Q11: The following exchange rates are in equilibrium:
Q12: Prices in two currencies are related through
Q13: A bank is in a short euro
Q14: Interest rate parity (IRP) holds within the
Q15: Prices in two currencies are related through
Q17: The following exchange rates are in equilibrium:
Q18: The actions of arbitrageurs promote the law
Q19: Forward premiums and discounts depend on interest
Q20: Real assets are more likely to conform
Q21: Empirical evidence indicates that forward parity holds
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