A financial institution's risk manager is training a newly hired team of analysts on the fundamental concepts and principles of foreign exchange rate parity, which play a crucial role in understanding currency markets and international finance. During the session, the manager explains the key assumptions, mathematical formulas, and implications associated with two primary theories: covered interest rate parity (CIRP) and uncovered interest rate parity (UIP). Considering this context, identify the correct statement regarding these two theories from the options provided below: | Financial Risk Manager Part 1 Quiz