Problem: Analyze the impact of the foreign exchange and derivatives markets on Honeywell Inc. and the countries (India and Brazil)in which the Honeywell Inc. is considering expansion. Specifically, describe the impact of exchange rate convertibility, bid-ask spreads, real exchange rates, and the interest rate parity on the relative investment attractiveness of the two countries in your scenario. Be sure to answer the following questions in your paper:
Q1. Does Purchasing Power Parity (PPP) hold? What is the significance of this?
Q2. What happened to the value of the real exchange rate over time? What is the significance of this change in value?
Be sure to properly cite the source(s) of the data that you used for your calculations. If you used an electronic source, include the URL. If you used a printed source please attach a copy of the data to your paper.