// multi-utility computation suite · offline · instant · precise
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fin.interest-rate-parity-covered Calculator
Calculates the Covered Interest Parity (CIP) forward exchange rate from spot rate and interest rate differential. CIP is one of the strongest no-arbitrage conditions in finance — deviations from CIP (the CIP basis) were large during the 2008 crisis and the COVID shock.
Inputs
S Spot
Amount per unit of time or per unit quantity. Check the denominator before interpreting.
Rd Pct
The rate at which interest accrues. Small differences compound dramatically — compare carefully when choosing between lenders.
Rf Pct
The rate at which interest accrues. Small differences compound dramatically — compare carefully when choosing between lenders.
T Years
Time for one complete cycle (s). Period = 1 / frequency. A 50 Hz signal has a 20 ms period.
Results
CIP forward rate F
The value at the specified point or condition.
forward rate (approximate)
The value at the specified point or condition.
forward premium/discount (%/yr)
The price paid for the option or insurance coverage. Option premium = intrinsic value + time value + volatility premium.
F = S·(1+rd·T)/(1+rf·T)
Reference formula or conversion factor shown for context.
UIP vs CIP
Reference formula or conversion factor shown for context.