Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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What is meant by
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Step 1
Purchasing power parity
It is a measuring of the prices in various other countries that utilizes the prices of the goods for making a comparison with the absolute PP of the currencies of the countries.
It is helpful in predicting that the market forces will lead to the adjustment of the rate of exchange when the prices of the national goods are not the same.
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