| Slide 7 of 32 |
| Relevance of Exchange Rate Risk |
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| u | Arguments against
relevance |
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| – | re: purchasing
power parity (PPP) theory, |
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| – | PPP does not hold
true in real life |
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| – | the exchange rate
does not change in |
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| accordance with
the inflation difference |
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| between the two
countries |
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