Purchasing power parity theory

Definition of interest rate parity (IRP)

What is Interest Rate Parity (IRP)? Interest rate parity (IRP) is a theory that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. Key points to remember Interest rate parity is the fundamental equation that governs the …

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3 common ways to predict exchange rates

Using an exchange rate forecast can help brokers and businesses make informed decisions to minimize risk and maximize returns. There are many methods of forecasting exchange rates. Here, we’ll take a look at some of the more popular methods: purchasing power parity, relative economic strength, and econometric models. 3 ways …

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Definition of the parity price

What is the parity price? The parity price refers to a price level that fixes two assets or securities of equal value. It is a concept that is used in several markets, including fixed income, stocks, commodities and convertible bonds. For convertible bonds, the concept of parity price is used …

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