Provide a Definition for Interest Rate Parity (IRP)

question 229

Essay

Provide a definition for interest rate parity (IRP).

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Definitions:

Interest Portion

The part of a payment that covers the interest or cost of borrowing, as distinguished from principal or repayment of the borrowed amount.

Principal Reduction

The act of paying down the outstanding balance of a loan, not including interest, to reduce the principal amount owed.

Interest Payment

The amount paid by a borrower to a lender for the use of borrowed money, usually expressed as a percentage of the principal.

Note Payable

A liability representing a written promise to pay a specified amount of money at a future date, often including interest payments.