The Spot Exchange Rate of British Pound $\le$ ) Is $256(Canadian) $\le$

question 30

Multiple Choice

The spot exchange rate of British Pound( $\le$ ) is $2.56(Canadian) / $\le$ .The annual inflation rate in Canadian $is 4% and 8% in Britain.What will be the anticipated exchange rate at the end of the year if PPP is valid?

• A)$2.4652/\(\le\)
• B)$2.1503/\(\le\)
• C)$3.0804/\(\le\)
• D)$2.5600/\(\le\) E(exchange rate) = spot rate x

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