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

Question

Quizplus · Accepted Answer

Interest rate parity occurs when the difference in interest rates between two countries is equal to the difference between the forward exchange rate and the spot exchange rate, leading to equal rates of return on assets in different currencies.

If There Are Equal Rates of Return Between Assets in Two