If there are equal rates of return between assets in two currencies, then there is
A) foreign exchange parity.
B) purchasing power parity.
C) interest rate parity.
D) parity of exchange.

Question

Quizplus · Accepted Answer

When there are equal rates of return on assets in two currencies, it implies that there is interest rate parity, meaning that the return on investing in assets in either currency should be the same after accounting for exchange rate fluctuations. Purchasing power parity relates to the relative price levels of two countries, and foreign exchange parity and parity of exchange are not commonly used terms in finance.

If There Are Equal Rates of Return Between Assets in Two