The interest rate parity condition indicates that the average value of the difference in interest rates between two countries should be zero.

Question

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The interest rate parity condition states that the expected return on an investment in one currency should be equal to the expected return on an investment in another currency, taking into account the exchange rate and interest rate differential between the two currencies. This means that the average value of the difference in interest rates between two countries should be zero.

The Interest Rate Parity Condition Indicates That the Average Value