Tutorial solutions 6CHAPTER 6:INTERNATIONAL PARITY RELATIONSHIPS ANDFORECASTING FOREIGN EXCHANGE RATESQUESTIONS5.Discuss the implications of the deviations from the purchasing power parity for countries’competitive positions in the world market.
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7.Researchers found that it is very difficult to forecast the future exchange rates moreaccurately than the forward exchange rate or the current spot exchange rate. How would youinterpret this finding?
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10. Explain the following three concepts of purchasing power parity (PPP):a. The law of one price.b.Absolute PPP.c. Relative PPP.Answer:
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