1MultinationalFinancialManagementAlanShapiro7thEditionJ.WileySonsPowerPointsbyJosephF.Greco,Ph.D.CaliforniaStateUniversity,Fullerton2CHAPTER4PARITYCONDITIONSANDCURRENCYFORECASTING3CHAPTEROVERVIEWI.ARBITRAGEANDTHELAWOFONEPRICEII.PURCHASINGPOWERPARITYIII.THEFISHEREFFECTIV.THEINTERNATIONALFISHEREFFECTV.INTERESTRATEPARITYTHEORYVI.THERELATIONSHIPBETWEENTHEFORWARDANDFUTURESPOTRATEVII.CURRENCYFORECAST...