Covered Interest Rate Parity

The principle that the yields from interest-bearing foreign and domestic investments should be equal when the currency market is used to predetermine the domestic currency payoff from a foreign investment. For example, suppose interest on 90 U.K. Treasury bills is 4% but only 1% in U.S. When the U.S. investor tries to take advantage of the higher yield, they translate U.S. dollars to Sterling to buy the Treasury bill and then sell 90-days forward Sterling (so they can translate the principal and interest back to U.S. dollars). Covered Interest Parity ensures that the return to this transaction is 1%. If it was different, there would be arbritrage.

Covered Interest Rate Parity

The principle stating that yields from two equivalent investments in the domestic market and the foreign market, respectively, are equal after accounting for fluctuations in the exchange rate. See also: Purchasing power parity, Covered interest rate arbitrage.

单词	covered interest rate parity
释义	Covered Interest Rate Parity Covered Interest Rate Parity The principle that the yields from interest-bearing foreign and domestic investments should be equal when the currency market is used to predetermine the domestic currency payoff from a foreign investment. For example, suppose interest on 90 U.K. Treasury bills is 4% but only 1% in U.S. When the U.S. investor tries to take advantage of the higher yield, they translate U.S. dollars to Sterling to buy the Treasury bill and then sell 90-days forward Sterling (so they can translate the principal and interest back to U.S. dollars). Covered Interest Parity ensures that the return to this transaction is 1%. If it was different, there would be arbritrage. Covered Interest Rate Parity The principle stating that yields from two equivalent investments in the domestic market and the foreign market, respectively, are equal after accounting for fluctuations in the exchange rate. See also: Purchasing power parity, Covered interest rate arbitrage.
随便看	government pension fund government pension investment fund government pension offset government performance and finance committee government performance and results act of 1993 government performance and review act government performance information consultants government performance management framework government performance project government personnel services division government pipeline and storage system government plant representative government policies government policy government policy and communications office government policy life cycle system government policy statement government postage stamp printers conference government pre-installation acceptance test government preliminary inspection government prices oversight commission government primary school government printing office government printing office alumni association government printing office regional printing procurement office