Capitalizing on discrepancies in quoted prices involving no risk and no investment of funds is referred to as interest rate parity.

Question

Quizplus · Accepted Answer

Interest rate parity is a theory that explains the relationship between interest rates and currency exchange rates, ensuring that arbitrage opportunities due to interest rate differentials are minimized or eliminated. Capitalizing on discrepancies in quoted prices with no risk and no investment is referred to as arbitrage, not interest rate parity.

Capitalizing on Discrepancies in Quoted Prices Involving No Risk and No