There is strong empirical support for

Question

Quizplus · Accepted Answer

Covered interest parity is a well-established principle in international finance, which states that the difference between two countries' interest rates should equal the expected change in their exchange rate. This is based on the assumption that there is no risk or uncertainty involved in investing abroad. While this is often not the case in practice, covered interest parity still provides a useful benchmark for predicting exchange rate movements in many situations.

There Is Strong Empirical Support for