(a) Please mathematically express and explain interest parity (5%) and covered interest parity, (5%) respectively.

(b) Please mathematically express and explain the Fisher effect describing the relationship between nominal interest rates and inflation across two countries i and j. (5%) Please mathematically prove the Fisher effect (5%). Please note that you are allowed to make necessary assumptions for the proof.

題組內容

(a) Please mathematically express and explain interest parity \( (5\%) \) and covered interest parity, \( (5\%) \) respectively.

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