Does the Interest Rate Parity Hold in Each of the Following

question 92

Essay

Does the interest rate parity hold in each of the following cases? In case it does not hold, calculate the risk premium.
A. R_t = 5, = 3, E_t = 5, = 7
B. R_t = 6, = 3, E_t = 5, = 7
C. R_t = 7, = 3, E_t = 5, = 7
D. R_t = 8, = 3, E_t = 5, = 7
E. R_t = 5, = 4, E_t = 5, = 7
F. R_t = 5, = 5, E_t = 5, = 7
G. R_t = 5, = 6, E_t = 5, = 7
H. R_t = 5, = 3, E_t = 6, = 7
I. R_t = 5, = 3, E_t = 7, = 7
J. R_t = 5, = 3, E_t = 8, = 7
K. R_t = 5, = 3, E_t = 5, = 8
L. R_t = 5, = 3, E_t = 5, = 9
M. R_t = 5, = 3, E_t = 5, = 10

---

Definitions:

Cognitive Therapy

A form of psychotherapy that aims to change negative patterns of thinking, helping to alter unwanted behavior and emotions.

Maladaptive Beliefs

Irrational or unrealistic thoughts and attitudes that prevent an individual from adjusting healthily to life situations.

Thinking Errors

Cognitive distortions or irrational thought patterns that contribute to negative emotions and behaviors.

Habitual

Habitual describes behaviors or activities that are done regularly and repeatedly, often automatically, without much thought.