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Suppose the Interest Parity Condition Holds

question 51

Essay

Suppose the interest parity condition holds. Also assume that the one- year interest rate in Australia (home country) is 5.5% and that the one- year interest rate in Canada (foreign country) is 5.5%. What does this imply about the current versus future expected exchange rate (for the Australian and Canadian dollars)? Explain.


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A Latin term meaning "something for something," referring to a mutual exchange where one thing is given in return for another.

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The range of characteristics pertaining to, and differentiating between, masculinity and femininity, often based on social and cultural differences rather than biological ones.

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