Parity

1.

A relationship between market prices at which there are no opportunities for arbitrage.

Under parity, the prices of composite synthetic instruments are exactly the same as the prices of the related outright instruments.

2.

The official rate of exchange between two currencies, if there is one.

3.

An exchange rate of 1 between two currencies.

For example, GBP 1 = 1 USD

See also

• Arbitrage
• Exchange rate
• Interest rate parity
• Outright
• Parity grid
• Put-call parity theory
• Synthetic