A | B | C | D | E | F | G | H | I | J | K | L | M | N | P | Q | R | S | T | U | V | W | X | Y | Z

Interest rate parity theorem

An theory that assumes the interest rate differential between two countries is equal to the difference between the forward foreign exchange rate and the spot rate. The ratio of the forward rate to the spot rate is thus a reflection of the interest rates in the two countries.