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Basic Question 17 of 27
Which of the following theory links forward exchange rates and expected spot exchange rates?
II. Covered interest rate parity.
III. The Fisher relation.
IV. Uncovered interest rate parity.
I. Purchasing power parity.
II. Covered interest rate parity.
III. The Fisher relation.
IV. Uncovered interest rate parity.
User Contributed Comments 1
| User | Comment |
|---|---|
| davidt876 | haven't they been telling us this entire time that uncovered interest rate parity does not include forward rates - only spot rates and interest rates? |
I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
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.