Interest rate parity | Business & Finance homework help
Interest rates and forward rates are not necessarily in equilibrium. This is because they are based upon different points of time in the future, so their values may vary depending on the maturity of the bonds being evaluated and other factors such as risk or inflation expectations.
Additionally, interest rate and forward rate changes can be affected by shifts in global/macroeconomic conditions which can further increase volatility within this market- making it difficult to determine how these variables will change over time without careful analysis beforehand . As such , there is no one-size fits all answer when it comes assessing if these two elements are indeed in equilibrium – rather each situation should be assessed on a case by case basis for accurate correlation between current/future rates .