- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 8. Currency Exchange Rates: Understanding Equilibrium Value
- Subject 3. A Long-Term Framework for Exchange Rates
CFA Practice Question
Which parity condition is most likely to hold in either the short or medium term?
B. uncovered interest rate parity.
C. purchasing power parity.
A. covered interest rate parity.
B. uncovered interest rate parity.
C. purchasing power parity.
Correct Answer: A
Except for covered interest rate parity, the key international parity conditions rarely hold in either the short or medium term. They tend to hold over relatively long horizons.
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