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Using PPP theory

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › Using PPP theory

Viewing 4 posts - 1 through 4 (of 4 total)
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  • May 31, 2023 at 4:27 am #685539
    Felix
    Participant
    • Topics: 8
    • Replies: 6
    • ☆

    Can I simply type PPP or IRP in the exam answers?

    Also, is the following relationship to estimate exchange rate correct?

    Home or base currency value =
    Home country*(1+home inflation rate) ÷ foreign country*(1+foreign inflation rate)

    May 31, 2023 at 8:41 am #685572
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54629
    • ☆☆☆☆☆

    Are you meaning if you can just type the abbreviations? If so, then yes you can.

    As far as forecasting a future exchange rate it concerned then you use the formula provided in the exam and my free lectures working through Chapter 22 of our free lecture notes explain how to use the formula, with examples.

    May 31, 2023 at 8:53 am #685574
    Felix
    Participant
    • Topics: 8
    • Replies: 6
    • ☆

    Yes, whether IRP is also a valid abbreviation?

    I will review Chapter 22 again.

    May 31, 2023 at 4:11 pm #685620
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54629
    • ☆☆☆☆☆

    Yes, it is a valid abbreviation 🙂

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