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Look for it in the London School of business and finance (mock Exams) on the 24 of November 2010
Four way equivalence model
A model that proposes a conceptual link between differences in: interest rates, spot and forward foreign exchange rates, expected inflation rates and the expected change in spot foreign exchange rates. its got a diagram of how its used in BPP text page 333.
See also
Fisher Effect
Purchasing power parityIt explains
“the LAW OF ONE PRICE” [PPP]
& the
“The difference between Spot Rate and forward rate is = Difference between Interest rates of those 2 countries”[IRTP]which proves the
International Fisher Effect [IFE]
and
Spot rate = Expected Change in spot rate [Expectations Theory]..
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