Which of the following statements describes the interest parity condition?
A)In the equilibrium,all the prices must be the same in the international market.
B)In the equilibrium,the inflation rates must be the same in the international market.
C)In the long run,the exchange rates must be the same in the international market.
D)In the equilibrium,the rates of return on assets of comparable risk and liquidity must be the same in the international market.

Question

Quizplus · Accepted Answer

The interest parity condition states that in the equilibrium, the rates of return on assets of comparable risk and liquidity must be the same in the international market. This means that investors should receive similar returns from investing in different countries, accounting for differences in exchange rates and interest rates. Choices A, B, and C do not accurately describe the interest parity condition.

Which of the Following Statements Describes the Interest Parity Condition