Covered Vs Uncovered Interest Rate Parity
1. Context
In this video from the FRM Part 1 and CFA Level 2 curriculum, we take a comparative look at Covered Interest Rate Parity and Uncovered Interest Rate Parity. We try and understand the situation in which we encounter each of these, their mathematical statement, their backing assumptions and whether each of them in persistently violated in practice or not. For more information about the FRM Part 1 preparation course, please visit the course page.
| Area | Financial Markets and Products |
| Reading | Foreign Exchange Markets |
| Reference | Chapter 9, Foreign Exchange Markets, GARP Official Books (Book 3, Quantitative Analysis). |