CFA Practice Question

There are 253 practice questions for this study session.

CFA Practice Question

Expected changes in exchange rates should equal the difference in expected national inflation rates. This is the conclusion of:
A. ex ante PPP.
B. Fisher effect.
C. International Fisher effect.
Explanation: The theory tells us that currencies of countries with expected, persistent high inflation rates should depreciate.

User Contributed Comments 2

User Comment
SMcalister International Fisher is interest rate differentials. Ex ante PPP is exchange rates.
darbyland SMcalister: PPP - inflation rates vs. Int'l Fisher - exchange rates
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