IRPT (Interest rate parity theory)

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May 18, 2018 at 1:43 pm #452678
chally
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Hi Sir,

I would like to know which interest rate is used in IRPT formula.

Do we use the borrowing rate or the deposit rate?

assuming a question had the two rates provided.

K.regards
May 18, 2018 at 2:51 pm #452697
John Moffat
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If there are two rates provided (which would be unusual in the exam) then use either – provided that you use either both borrowing rates, or alternatively both deposit rates.
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