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:

Federally Regulated Industries

Industries that operate under the laws and regulations of the federal government, such as telecommunications, transportation, and banking.

Bona Fide Occupational Qualification (BFOQ)

A justifiable reason for discrimination based on business reasons of safety or effectiveness.