Question $14(1$ point$)$

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Covered Interest Parity $($CIP$)...$

$...$ looks like Uncovered Interest Parity $($UIP$),$ except the CIP formula has F instead of $E^{\text{'}}.$ The forward rate $F$ is known in the present, whereas the future spot rate $E^{\text{'}}$ is not known yet.

$...$ fails miserably when confronted with data. In contrast, CIP works very well for major currency pairs.

$...$ says that if $E=40,$ and $i^{**}-i=5\%,F=44.$

$...$ says that if $E=40,$ and $i^{**}-i=5\%,F=38.$