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TeachMeFinance.com - explain Parity parity -- equality in amount, status or character. In futures trading, it is the situation in which cash and futures contracts are selling at equivalent yields. another definition... Parity -- 1. Equality in amount or value. 2. Equivalence of prices of goods or services in different markets 3. The relationship between two currencies such that they are exchangeable for each other at par or at the official rate of exchange. 4. Equivalence of prices of farm products (or farm income) to those existing at a former time, or to the general cost of living. historic definition... Parity -- This word when applied to the price of a stock means a price which is equivalent or equal to the price for the same stock when it is quoted on a different basis. The price in London of an American stock is at parity with the price in New York when the stock is selling in London at a price which, allowing for the difference in method of quoting, is equivalent or equal to the price at which it is selling in New York. In grain there is a normal difference in price between two markets equal to the cost of transporting the grain from the market where the lower price prevails to the market where the higher price prevails. When the difference is normal prices are at parity. It is the same in cotton, etc. About the author Mark McCracken Author: Mark McCracken is a corporate trainer and author living in Higashi Osaka, Japan. He is the author of thousands of online articles as well as the Business English textbook, "25 Business Skills in English". Copyright © 2005 by Mark McCracken, All Rights Reserved. TeachMeFinance.com is an informational website, and should not be used as a substitute for professional financial or legal advice. TeachMeFinance.com and its owner recommend consultation with a professional financial advisor prior to any investment or financial decision. Please read our disclaimer.