The current spot rate between the Canadian dollar and the Euro is C$1.6000/euro.The Canadian and European inflation rates are expected to be 2% and 4% per year for the next 10 years respectively.Using purchasing power parity to predict the exchange rate in 10 years,the predicted exchange rate is:
A) C$1.3176/euro.
B) C$1.5692/euro.
C) C$1.6000/euro.
D) C$1.6923/euro.
Correct Answer:
Verified
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