Suppose that spot and forward exchange rates are measured, Financial Management

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Suppose that spot and forward exchange rates are measured

Suppose that spot and forward exchange rates are measured in units of domestic currency per unit of foreign currency. There is a positive forward premium for the domestic currency. If covered interest parity holds, what should be true of the difference between the interest rate on a domestic bond and the interest rate on a foreign bond with the same risk and maturity characteristics?

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Financial Management: Suppose that spot and forward exchange rates are measured

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