Question: Question 3 (a) What does the Interest Rate Parity theory postulate?( (b) Provide a numerical example to illustrate the Interest Rate Parity theory. (c) Show

Question 3 (a) What does the Interest Rate Parity theory postulate?(

(b) Provide a numerical example to illustrate the Interest Rate Parity theory.

(c) Show the derivation of the Interest Rate Parity condition: F1 / e0 = (1+ iH) /(1+ iF)

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