If interest rate parity exists, the forward hedge will always outperform the money market hedge.

Name: If interest rate parity exists, the forward hedge will always outperform the money market hedge.
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Question

If interest rate parity exists, the forward hedge will always outperform the money market hedge.
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Quizplus · Accepted Answer

Interest rate parity does not guarantee that the forward hedge will always outperform the money market hedge. The choice between the two hedging methods depends on various factors such as transaction costs, liquidity, and market expectations.

If Interest Rate Parity Exists, the Forward Hedge Will Always