Page 12 - FINAL CFA II SLIDES JUNE 2019 DAY 4
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LOS 11.f: Describe relations among the READING 11: CURRENCY EXCHANGE RATES: UNDERSTANDING EQUILIBRIUM VALUE
international parity conditions.
MODULE 11.2: MARK-TO-MARKET VALUE, AND PARITY CONDITIONS
UCIRP also holds (& vice versa).
If the ex-ante version of relative PPP and IFR hold, UCIRP will also hold.
ID are mirrored by IRD. This is true
If FRP holds, ….
if IFR holds –thus, we can also use
IDs to forecast future exchange
rates—which is the premise of the
ex-ante version of PPP.
holds by arbitrage.
