Question: 3-Forward Parity (essentially a variant derived from the expectations theory) states that ? any forward premium or discount is equal to the expected change in

3-Forward Parity (essentially a variant derived from the expectations theory) states that ? any forward premium or discount is equal to the expected change in the exchange rate. any forward premium or discount is equal to the actual change in the exchange rate. an increase (decrease) in the expected inflation rate in a country will cause a proportionate increase (decrease) in the interest rate in the country. the nominal interest rate differential reflects the expected change in the exchange rate.

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