Interest rate parity suggests that you may assume that it is cheaper to borrow in a currency with a low nominal rate of interest.

Question

Quizplus · Accepted Answer

Interest rate parity implies that differences in nominal interest rates between two countries are offset by changes in the exchange rate, so borrowing in a currency with a low nominal rate does not guarantee lower costs when exchange rate changes are considered.

Interest Rate Parity Suggests That You May Assume That It