Week 7 International Economics: Theory And Policy Questions

Order 100% Plagiarism free paper

Based on your class book Krugman, P., Obstfeld, M., & Melitz, M. (2013). International economics: Theory and policy (9th ed). Upper Saddle River, NJ: Prentice Hall, along with 2 additional outside references please answer the following two questions
QUESTION 1
What is covered interest parity? What are the two assumptions of covered interest parity? How do investors use covered interest arbitrage to maximize their investment returns?
Your response should be at least 500 words in length.
QUESTION 2
Describe the key factors in foreign exchange market. Explain risk and liquidity as they relate for foreign exchange market.
Your response should be at least 500 words in length.