Covered Interest Rate and Uncovered Interest Rate

Contemporary empirical analysts confirm that the uncovered interest rate parity theory is not prevalent. However, the violations are not as huge as previously contemplated. The violations are in the currency domain rather than being time horizon dependent.

In contrast, the covered interest rate parity is an accepted theory in recent times amongst the OECD economies, mainly for short-term investments. The apparent deviations incurred in such models are actually credited to the transaction costs.

Related Posts

© 2024 Business Management - Theme by WPEnjoy · Powered by WordPress