The actual exchange rate of the real, Brazil's currency, is 2.40 real per U.S. dollar. According to the PPP estimation, the exchange rate should be 1.20 real per U.S. dollar. This implies that the real is:

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The PPP (Purchasing Power Parity) estimation suggests the real should be stronger (1.20 real per U.S. dollar) than it currently is (2.40 real per U.S. dollar). This means the real is undervalued. To find the percentage, compare the actual rate to the PPP rate: (2.40 - 1.20) / 1.20 = 1.00 or 100 percent undervalued. However, since none of the options correctly reflects this calculation, the closest correct option based on the given choices is A) undervalued by 50 percent, assuming a misunderstanding in the calculation process.

The Actual Exchange Rate of the Real, Brazil's Currency, Is