Integration and Interest rate parity: Difference between pages

From ACT Wiki
(Difference between pages)
Jump to navigationJump to search
imported>Doug Williamson
m (Add link.)
 
imported>Doug Williamson
(Add link.)
 
Line 1: Line 1:
1. ''Business combinations''
(IRP).


A reduction in the total number of participants in a market, following a merger or acquisition.
This theory describes the expected relationship between [[Spot rate|spot]] and [[Forward foreign exchange rate|forward foreign exchange rates]], and the [[Interest rate|interest rates]] in the related currency pair.


This type of integration may be 'vertical' or 'horizontal'.
Under efficient market conditions the interest rate parity theory predicts that the forward FX rate (available in the market today) should be equal to the spot FX rate, adjusted for the difference in interest rates between the currency pair over the relevant period.




2. ''Financial maths''
IRP holds very strongly for actively traded currency pairs; less so for currencies which are not so actively traded.  


In maths and financial maths, integration is the reverse process of [[differentiation]].


== See also ==
* [[CertFMM]]
* [[Covered interest arbitrage]]
* [[Efficient market hypothesis]]
* [[Foreign exchange]]
* [[Forward foreign exchange rate]]
* [[Forward forward rate]]
* [[Four way equivalence model]]
* [[Interest rate]]
* [[No arbitrage conditions]]
* [[Parity]]
* [[Spot rate]]


3. ''Money laundering''
[[Category:Manage_risks]]
 
The conversion of laundered money into assets which have the appearance of having been legitimately acquired.
 
This is a common third stage of money laundering, following 'placement' and 'layering'.
 
 
== See also ==
* [[Acquisition]]
* [[Derivative]]
* [[Differentiation]]
* [[Horizontal integration]]
* [[Layering]]
* [[Merger]]
* [[Money laundering]]
* [[Placement]]
* [[Vertical integration]]

Revision as of 18:18, 4 May 2016

(IRP).

This theory describes the expected relationship between spot and forward foreign exchange rates, and the interest rates in the related currency pair.

Under efficient market conditions the interest rate parity theory predicts that the forward FX rate (available in the market today) should be equal to the spot FX rate, adjusted for the difference in interest rates between the currency pair over the relevant period.


IRP holds very strongly for actively traded currency pairs; less so for currencies which are not so actively traded.


See also

Retrieved from ‘https://wiki.treasurers.org/w/index.php?title=Integration&oldid=27801’