Indicate the meaning of the terms "covered interest parity" (CIP) and "uncovered interest parity" (UIP). Then, focusing on "covered interest parity," explain by numerical example and with at least one graph how such parity is conceptually attained in the context of a home country
and a foreign country if the short-term interest rate in the foreign country is greater than the short-term interest rate in the home country at the same time that the spot rate on the foreign currency equals the forward rate on the foreign currency. (Assume that the two interest rates are on comparable assets of the same risk.)
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