Crystal2018-12-20 23:32:49

An Australia-based fixed-income investment manager is deciding how to allocate herportfolio between Australia and Japan. (As before, the AUD is the domestic currency.)Australia’s one-year deposit rate is 5%, considerably higher than Japan’s at 1%, butthe Australian dollar is estimated to be roughly 10% overvalued relative to the Japaneseyen based on purchasing power parity. Before making her asset allocation, the investmentmanager considers the implications of interest rate differentials and PPP imbalances. 1.All else equal, which of the following events would restore the Australian dollarto its PPP value? A.The Japanese inflation rate increases by 4%. B.The Australian inflation rate decreases by 10%. C.The JPY/AUD exchange rate declines by 10%. 答案为什么选C，希望老师解答下，谢谢