The relationship that says that the forward premium or discount is equal to the interest differential is
A)interest rate parity.
B)purchasing power parity.
C)the Fisher equation.
D)the term structure of interest rates.

Question

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The relationship that states that the forward premium or discount is equal to the interest differential is called interest rate parity. Purchasing power parity refers to the notion that the price of a basket of goods should be the same across countries when converted to a common currency. The Fisher equation relates nominal interest rates, inflation rates, and real interest rates. The term structure of interest rates describes the relationship between yields on bonds with different maturities.

The Relationship That Says That the Forward Premium or Discount