Subject category:
Finance, Accounting and Control
Published by:
Darden Business Publishing
Version: 5 May 2025
Revision date: 27-May-2025
Length: 16 pages
Data source: Published sources
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https://casecent.re/p/61753
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Abstract
This note reviews the four central parity conditions that underlie most theories regarding the relationship between exchange rates, inflation, and interest rates. The concepts are illustrated through a unified example exploring the relation between the US dollar and the Norwegian krone. The note presents both an intuitive understanding of the relations as well as precise mathematical formulas frequently employed in analysis.
About
Abstract
This note reviews the four central parity conditions that underlie most theories regarding the relationship between exchange rates, inflation, and interest rates. The concepts are illustrated through a unified example exploring the relation between the US dollar and the Norwegian krone. The note presents both an intuitive understanding of the relations as well as precise mathematical formulas frequently employed in analysis.