Match List - I with List - II.

List - I

(Parity)

List - II

(Meaning)

A.
Interest Rate Parity
I.
A forward exchange rate should be what the foreign exchange market participants expect the future spot rate to be.

B.
Purchasing power parity
II.
In the perfect capital market, real rates will be the same in all countries.

C.
Forward rates and future
III.
The exchange rate between two currencies spot rate parity of two countries equal the ratio between the price of goods in these countries.

D.
International Fisher effect
IV.
The relationship between interest rates and exchange rates of two countries.

Choose the correct answer from the options given below:

Question

List - I (Parity)		List - II (Meaning)
A.	Interest Rate Parity	I.	A forward exchange rate should be what the foreign exchange market participants expect the future spot rate to be.
B.	Purchasing power parity	II.	In the perfect capital market, real rates will be the same in all countries.
C.	Forward rates and future	III.	The exchange rate between two currencies spot rate parity of two countries equal the ratio between the price of goods in these countries.
D.	International Fisher effect	IV.	The relationship between interest rates and exchange rates of two countries.