Interest rate parity; purchasing power parity

Q: Formula for interest rate parity?

A: Interest Rate Parity: It is the technique used to govern the relation between currency exchange rate…

Q: Define Trade discounts.

A: Business:   It refers to a commercial activity involving buying and selling of a product or a…

Q: What is market debt ratio?

A: Debt ratio: The debt ratio is a financial ratio that quantifies the degree of a corporation’s…

Q: Discuss the following models in relation to purchasing power parity.

A: Comparative rates of inflation in different countries are the factors influencing the exchange rate.…

Q: Explain purchasing power bond

A: Bonds: A bond, also recognized as a fixed-income security, is a debt instrument shaped for the…

Q: clearly distinguish between norminal interest rate and effective interest rate

A: The term interest rate can be defined as the fixed income received on the investment. . There are…

Q: How is the Equivalence Calculations made with Effective Interest Rates?

A: The formula for Effective annual rate is  Where, r - rate of return n - number of compounding.…

Q: What is net interest margin(NİM)?

A: There are various profitability ratios

Q: What are the implications of interest rate parity theorem.

A: Interest rate Parity:- The interest rate parity (IRP) theory states that the difference between the…

Q: difference betweem money market and financial market

A: The financial sector is the delicate network of the economic system, where many different kinds of…

Q: Define Debt Issue Costs.

A: Bonds: Bonds are a kind of interest bearing notes payable, usually issued by companies, universities…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: What is a functional currency? What is the Intercst Coverage (Times Intcrest Earned) Ratio?

A:

Q: Define embedded rate (for debt)

A: An embedded option is the component of financial security the gives the issuer of the debt option or…

Q: Define Arbitrage Pricing Theory (APT)

A: Arbitrage is the method of making profit from the temporary change in the cost of shares by buying…

Q: Which of the following theories can be assessed using data that exists at one specific point in…

A: Purchasing power parity: Purchasing power parity (PPP) is a concept which means that exchange rates…

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

Q: Describe the Equivalence Calculations with Effective Interest Rates?

A: The effective interest rate is the real interest rate that is charged on the loan amount when the…

Q: Define implicit rate of interest.

A: Bonds: Bonds are long-term promissory notes that are issued by a company while borrowing money from…

Q: How is NPW used as a Function of Interest Rate?

A: Present value computes the existing value of future benefits by discounting future worth with a…