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Basic Question 4 of 27
Which parity condition is most likely to hold in either the short or medium term?
B. uncovered interest rate parity.
C. purchasing power parity.
A. covered interest rate parity.
B. uncovered interest rate parity.
C. purchasing power parity.
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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.