--%>

Implications of purchasing power parity

Explain implications of the purchasing power parity for the operating exposure.

E

Expert

Verified

In case changes of the exchange rate are matched through the inflation rate differential between the countries, competitive positions of the firms will not get distorted by the changes of exchange rate. Firms are not subjected to the operating exposure.

   Related Questions in Financial Accounting

  • Q : Segmented and Integrated capital markets

    Explain how cost of the capital is computed in the segmented vs. integrated capital markets.

  • Q : Benefit of Electronic Funds Transfer

    Illustrate the benefit of Electronic Funds Transfer?

  • Q : Who is a debtor Who is a debtor ?

    Who is a debtor? Briefly explain the term.

  • Q : Screening of Elder Abuse What is the

    What is the aim of the research in the screening of elderly abuse at the primary health care level ?

  • Q : Payment method-Buy pound or investing

    When you have visited the London, you have purchased a Jaguar for £35,000, which is payable within the three months. Enough cash is there at your bank in the New York City that pays 0.35% of interest per month, compounding monthly, to pay for car. Presently, spo

  • Q : Financial hedging of firm’s operating

    List disadvantages and advantages of the financial hedging of firm’s operating exposure through the operational hedges (like relocating the manufacturing site)?

  • Q : Eliminating exposure of the currency

    Banks find it essential in order to accommodate their client’s requirements for buying or selling foreign exchange forward, in several instances for the hedging purposes.  How the bank can eliminate the exposure of the currency it has made for itself by acc

  • Q : Case study of a local public utility

    The local public utilities commission has been charged with inspecting and reporting utility problems in the area. They have three electrical inspectors and two gas inspectors, each available for 40 hours , to analyze structures in their respective areas of expertise.

  • Q : Prepare the balance sheet At the end of

    At the end of March, 2006 the balances in the various accounts of TTTTT & Company are as follows: Rs. in million Accounts Balance Equity capital 120 Preference capital 30 Fixed assets (net) 217 Reserves and surplus 200 Cash

  • Q : Development phases of Friendship There

    There are six developmental phases of how friendships develop. Identify each phase in sequence and discuss the characteristics of each phase by using real or hypothetical example to illustrate this developmental path.