Which One of the Following Formulas Correctly Describes the Relative

question 3

Multiple Choice

Which one of the following formulas correctly describes the relative purchasing power parity relationship?

• A) E(S_t) = S₀ * [1 + (h_FC - h_CDN)]^t
• B) E(S_t) = S₀ * [1 - (h_FC - h_CDN)]^t
• C) E(S_t) = S₀ * [1 + (h_CDN + h_FC)]^t
• D) E(S_t) = S₀ *[1 - (h_CDN - h_FC)]^t
• E) E(S_t) = S₀ * [1 + (h_CDN - h_FC)]^t

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