Chapter Five International Parity Relationships forecasting Exchange rates Chapter objective This chapter examines several key international parity relationships, such as interest rate parity and purchasing power parity
INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition 5 Chapter Five International Parity Relationships & Forecasting Exchange Rates Chapter Objective: This chapter examines several key international parity relationships, such as interest rate parity and purchasing power parity
Chapter Outline ● Interest Rate Parity o Purchasing Power Parity The fisher effects o Forecasting Exchange rates McGraw-Hilylrwoin 5-1 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 5-1 Chapter Outline ⚫ Interest Rate Parity ⚫ Purchasing Power Parity ⚫ The Fisher Effects ⚫ Forecasting Exchange Rates
Chapter Outline ● Interest Rate parity Covered Interest Arbitrage IRP and Exchange Rate Determination Reasons for deviations from Irp o Purchasing Power Parity ● The Fisher effects o Forecasting Exchange Rates McGraw-Hilylrwoin 5-2 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 5-2 Chapter Outline ⚫ Interest Rate Parity ◼ Covered Interest Arbitrage ◼ IRP and Exchange Rate Determination ◼ Reasons for Deviations from IRP ⚫ Purchasing Power Parity ⚫ The Fisher Effects ⚫ Forecasting Exchange Rates
Chapter Outline ● Interest Rate Parity o Purchasing Power Parity PPP Deviations and the real exchange rate Evidence on Purchasing Power Parity ● The Fisher effects Forecasting Exchange Rates McGraw-Hilylrwoin 5-3 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 5-3 Chapter Outline ⚫ Interest Rate Parity ⚫ Purchasing Power Parity ◼ PPP Deviations and the Real Exchange Rate ◼ Evidence on Purchasing Power Parity ⚫ The Fisher Effects ⚫ Forecasting Exchange Rates
Chapter Outline ● Interest Rate Parity Purchasing Power Parity The fisher effects o Forecasting Exchange Rates McGraw-Hilylrwoin Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 5-4 Chapter Outline ⚫ Interest Rate Parity ⚫ Purchasing Power Parity ⚫ The Fisher Effects ⚫ Forecasting Exchange Rates