covered-interest-rate-parity

Learning objectives: Explain the purchasing power parity theorem and use this theorem to calculate the appreciation or depreciation of a foreign currency. Describe the relationship between nominal and real interest rates. Describe how a non-arbitrage assumption in the foreign exchange markets...

Learning objectives: Differentiate between the mechanics of foreign exchange (FX) swaps and cross-currency swaps. Identify key factors that affect the cross-currency swap basis. Assess the causes of covered interest rate parity violations after the financial crisis of 2008. Questions: 20.17.1...

Learning objectives: Describe the links between banks and capital markets. Explain the effects of forced deleveraging and the failure of covered interest rate parity. Discuss the US dollar’s role as the measure of the appetite for leverage. Describe the implications of a stronger US dollar on...