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Basic Question 3 of 27
Covered interest rate parity is enforced by:
B. expected movements in exchange rates over long period of time.
C. an executable arbitrage relationship.
A. sound economic theories.
B. expected movements in exchange rates over long period of time.
C. an executable arbitrage relationship.
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Edward Liu
Learning Outcome Statements
explain international parity relations (covered and uncovered interest rate parity, forward rate parity, purchasing power parity, and the international Fisher effect);
describe relations among the international parity conditions;
evaluate the use of the current spot rate, the forward rate, purchasing power parity, and uncovered interest parity to forecast future spot exchange rates;
explain approaches to assessing the long-run fair value of an exchange rate;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.