Why Should Interest Rate Parity Mean That the Forward Premium

question 9

Essay

Why should interest rate parity mean that the forward premium should equal the interest rate differential between countries?

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Definitions:

Online Shopping Transactions

Financial transactions made over the internet involving the buying and selling of goods or services.

Payment Fraud

Illegal transactions aimed at deceitfully obtaining money, goods, or services by manipulating payment processes.

Chargeback

A transaction reversal usually initiated by the cardholder's bank, intended to serve as a form of consumer protection from fraudulent activity.

Internet Fraud

Deceptive practices and scams perpetrated online, aiming to defraud victims through means like phishing, identity theft, and financial exploitation.