Question: please just show me where to plot each point for the line. Thanks! The following graph plots the forward premium for a foreign currency along
please just show me where to plot each point for the line. Thanks!
The following graph plots the forward premium for a foreign currency along the horizontal axis, while measuring the interest rate differential (between a home country and a foreign country) along the vertical axis. I refers to the Interest rate in the home country, while is refers to the interest rate in a foreign country On the following graph, use the blue line (circle symbol) to plot the combinations of the forward premium and Interest rate differential that are consistent with Interest rate parity (IRP). 5 IRP Line 4 3 2 -10 - 1 2 1 Forward Premium (1)
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