Would you please explain to me the diff bw uncovered and covered interest rate parity? Couldn’t wrap my head around it. Thanks a lot!
Covered IRP uses Fwd Rates an Uncovered IPR uses Expected Spots. That’s all I remember about that.
To add to FinNinja’s point: Covered IRP is “observable” while Uncovered is “unobservable” and purely a mathematical exercise.
uncovered IRP is that which cannot be hedge or determined via a forward contract, cant use forward rate, so use “expected”