How to calculate interest rate parity?

Do you know what’s the formula to calculate the interest rate parity?

Category: asked October 16, 2013

1 Answer

0
The formula for the interest rate parity is the following:

Forward rate= (spot rate*(1+ foreign interest rate)/(domestic interest rate).

There are certain assumptions that need to be true for this equation to hold true though (such as complete markets etc.)

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