The correct answer is C.

Covered Interest Rate Parity (CIP) is the term that describes the hypothetical condition where the correlation between interest rates, spot, and forward currency values of two countries are equal. CIP is a no-arbitrage condition in financial economics that states that the nominal interest rates in two different countries should be equal, once the foreign exchange risk is hedged. This condition is expressed mathematically as:

$$\frac{F}{S} = \frac{1 + r}{1 + r^*}$$

Where: S is the spot exchange rate in US dollar per foreign currency, F is the corresponding forward exchange rate, r is the US dollar interest rate, and r* is the foreign currency interest rate. This condition is a cornerstone of the foreign exchange markets and is used to prevent potential arbitrage opportunities.

Choice A is incorrect. FX swaps are a financial instrument used to hedge against foreign exchange risk, not a theoretical condition that stipulates an equal correlation between the interest rates, spot, and forward currency values of two different countries.

Choice B is incorrect. Cross-currency swaps are agreements in which two parties exchange principal and interest in one currency for the same in another currency. They do not represent a theoretical condition correlating interest rates, spot and forward currency values.

Choice D is incorrect. Mark-to-market refers to the accounting practice of valuing an asset according to its current market price rather than its book value. It does not describe any correlation between interest rates, spot and forward currency values of different countries.