Interest rate parity

For a quote of domestic currency per one foreign unit, the simple matched-period relationship is F = S × (1 + i_domestic)/(1 + i_foreign). State the units, period and relevant borrowing or deposit rates; practical bid-offer spreads create a range rather than a single frictionless equality. Covered parity links a contracted forward rate to funding and investment rates. It should not be confused with certainty about the future spot rate. A syllabus may use parity relationships for forecasting under additional assumptions, which must remain explicit.