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Q: please define the "interest rate parity"

Category: glossary , Asked by: B. Lewis from Cork, Ireland

A: an "interest rate parity " is A theory that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. Interest rate parity plays an essential role in foreign exchange markets, connecting interest rates, spot exchange rates and foreign exchange rates. The relationship can be seen when you follow the two methods an investor may take to convert foreign currency into U.S. Dollars. Option A would be to invest the foreign currency locally at the foreign risk-free rate for a specific time period. The investor would then simultaneously enter into a forward rate agreement to convert the proceeds from the investment into U.S. Dollars, using a forward exchange rate, at the end of the investing period. Option B would be to convert the foreign currency to U.S. Dollars at the spot exchange rate, then invest the dollars for the same amount of time as in option A, at the local (U.S.) risk-free rate. When no arbitrage opportunities exist, the cash flows from both options are equal. Visit HY Markets

    do you know what the "down-and-out option" is?

    Category: glossary by E. Yates from United States

    a "down-and-out option " is A type of knock-out barrier option that ceases to exist when the price of the underlying security hits a specific barrier price level. If the price of the underlying does not reach the barrier level, the investor has the right to exercise their European call or put option at the exercise price specified in the contract. For example, a down-and-out option has a strike price of 100 and a knock-out price of 80. At the option's inception the price of the stock was 95 but before the option was exercisable the price of the stock hit 80, this means the option automatically expires worthless even if the underlying hits 100 before the exercise date.

    Which forex site has the nicest mail customer support?

    Category: general by F. Ferrell from Wien, Austria

    "Global Forex Trading (GFT)" is definitely the forex site for you if you want a forex site with an easygoing help service. The support team is awesome - they give the impression that they're definitely professional.

    Is there a foreign exchange trading system that's famous for its long time history around?

    Category: general by X. Boone from France

    We think "etoro.com" is the right place for you. Etoro.com is a ECN forex firm that is located at 13, Grigoriou Xenopoulou Str, Elegant house, Suite 103, 3101-Ayios Nicolaos, Limassol, Cyprus.. After an uncontaminated start a few years back, it's slowly ripening into one of the most active web-based forex trading platforms available.

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    do you know what "teacher retirement system" is?
    An organization that is specifically set up for teachers to help with or manage retirement planning. Because there are individual teacher retirement systems set up for each state, there are differences in what they each offer. For the most part, the organization helps arrange retirement benefits for its member and their beneficiaries. As part of the retirement program, members make regular contributions to their retirement accounts. The funds that are contributed are then invested and managed. The teacher retirement system also offers disability and death benefits to its members and ensures the responsible distribution of the benefits. Visit ODL Securities Inc.

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