Discuss covered interest rate parity (CIRP) with reference to foreign exchange market efficiency

Diskussion der gedeckten Zinsparitätentheorie bezogen auf Wechselkurs Effizienz


Scientific Essay, 2010

10 Pages, Grade: 1,0


Abstract or Introduction

Die Arbeit untersucht und erläutert die verschiedenen wissenschaftlichen Ergebnisse von renommierten Untersuchungen. The covert interest rate parity is a well-established theory model, which holds not 100%, but the principle hold nearly for most of the time in highly developed countries. The CIRP theory cares for more efficient exchange markets. However, in unstable or crisis situations the CIRP is more susceptible, it is also in developing countries with factors such as political risk, credit risk or the lack of information. Then the CIRP could not hold, this means the exchange markets can be inefficient, for reasons like a lack of information, the markets can be still efficient because they are above risks and have been incorporated, Keynes assumes in his original theory that deviations of 0.5% percent for investors due to rate adjustments during trading and transaction costs, margin becomes smaller and smaller during the time at last due to the information technology and the associated ever-faster trade opportunities and reduces transaction costs ensure more that the CIRP holds better. However the information technology just reduces the deviations, but do not influence factors like default risks or opportunity costs.

Details

Title
Discuss covered interest rate parity (CIRP) with reference to foreign exchange market efficiency
Subtitle
Diskussion der gedeckten Zinsparitätentheorie bezogen auf Wechselkurs Effizienz
College
University of Hull
Course
International Finance
Grade
1,0
Author
Year
2010
Pages
10
Catalog Number
V165493
ISBN (eBook)
9783640812806
File size
379 KB
Language
English
Notes
Die Arbeit wurde mit 95 Punkten bewertet, wobei es ab 70 schon die 1,0 gibt.
Keywords
CIRP, Zinsparitätentheorie, Peijie Wang, Wechselkurse, Exchange rates
Quote paper
Sascha Kurth (Author), 2010, Discuss covered interest rate parity (CIRP) with reference to foreign exchange market efficiency, Munich, GRIN Verlag, https://www.grin.com/document/165493

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