Question

please answer questios as is indicated

What is meant by international parity conditions? What impacts international parity? Do you think international parity theory holds in the currency markets? Why or why not? liek auahanan atee ariee lanle and

Answer 1

What do is meant by international parity conditions.

International parity is an equilibrium condition that establishes linkage between financial prices in the absence of arbitrage. It refers to the exchange rate between 2 currencies making the purchasing power of both currencies substantially equal.

What impacts international parity.

1. Rates of inflation

2. Technological advancements

3. Speculation and market views

4. Political relationships between countries

5. Capital movements between countries.

Do you think international parity holds in the currency markets? Why or why not?

Yes, international parity holds good in the currency markets as it is the rate which equates the purchasing power of 2 currencies equal. Investors make optimal financial decisions regarding currency risk exposure using this.