If there are equal rates of return between assets in two currencies, then there is

Question

Quizplus · Accepted Answer

Interest rate parity refers to the situation where the yields on two assets denominated in different currencies are equal. This means that investors would not be able to earn an arbitrage profit by borrowing in one currency at a lower interest rate and investing in another currency at a higher interest rate. Interest rate parity is an important concept in international finance and is based on the assumption that capital flows are free to move across borders.

If There Are Equal Rates of Return Between Assets in Two