What is the interest parity condition, International Economics

Assignment Help:

Q. What is the interest parity condition?

Answer: The circumstance that the expected returns on deposits of any two currencies are equal when measured in the same currency is called the interest parity condition. It involve that potential holders of foreign currency deposits view them as equally desirable assets that is risk is assumed away. In the notational forms:

R$ = RE + (Ee $/E - E$/E) / E$/E.


Related Discussions:- What is the interest parity condition

Determine the amount of money an individual desires to hold, Q. What are th...

Q. What are the factors that determine the amount of money an individual desires to hold? Answer: Three major factors that are first one the expected return the asset offers co

Persistence of protectionism, Q. It is claimed that the persistence of pro...

Q. It is claimed that the persistence of protectionism is often the result of the fact that those who lose from trade are usually a much more informed, cohesive and motivated a gr

Stolper samulson theorum, is the stolper samulson theorem is relevant in t...

is the stolper samulson theorem is relevant in these days

The wage rate, Q. Suppose the relative price of good 1 falls relative to th...

Q. Suppose the relative price of good 1 falls relative to the price of.  What happens to the wage rate? Answer: The labour component of the price of 1 is bigger than that of p

Gross barter terms of trade, tion..What is the range of gross barter terms ...

tion..What is the range of gross barter terms of trade ?

Effect on gdp, The recessionary gap in a country is $1 trillion. The spendi...

The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interes

Effects of an increase in the money supply, Q. What will be the effects of ...

Q. What will be the effects of an increase in the money supply on the interest rate? Answer: An enhance in the money supply will origins the interest rate to decrease. This m

International trade, INTERNATIONAL TRADE can be understood as follows B...

INTERNATIONAL TRADE can be understood as follows By the international trade, we signify the exchange of goods and services between different countries. For any individual count

Compare and contrast economic regions, Compare and contrast China's newest ...

Compare and contrast China's newest economic regions: the Special Economic Zones (SEZs), Open Cities, and Open Coastal Areas. What is the purpose of each regional type? Show how e

Effects of a temporary increase in the european money supply, Q. Using a fi...

Q. Using a figure describing both the U.S. money market and the foreign exchange market, analyze the effects of a temporary increase in the European money supply on the dollar/euro

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd