The following options are all important reasons to study the theory of PPP EXCEPT:
A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies.
B) deviations from PPP significantly affect the profitability of firms.
C) it is particularly useful in assessing cost-of-living differences across countries
D) the deviations from the theory are very small when it comes to the determination of exchange rates
Answer: D
You might also like to view...
Which one of the following parties can sell shares of ABC stock in the primary market?
A. ABC company B. Any corporation, other than the ABC company C. Any institutional shareholder D. Any private individual shareholder E. Only officers and directors of ABC Company
What is the primary purpose of the International Finance Corporation?
A) make soft loans B) make hard loans C) promote private sector development in developing countries D) provide political risk insurance to MNEs operating in emerging economies