interest parity

interest parity UK US noun [U] (also interest rate parity) FINANCE
the theory that the possible profit from exchanging currency to that of a country with a lower interest rate, then investing the money in that country, is equal to the possible profit from investing the money in the original country: »

According to interest parity, interest rate arbitrage cannot produce a risk-free return.


Financial and business terms. 2012.

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