A U.S. institutional investor has invested in a portfolio of stocks in India. The annual inflation rate

Question:

A U.S. institutional investor has invested in a of in India. The annual inflation rate is 6 percent in India and 2.5 percent in the United States.
a. If the purchasing power parity holds between the United States and India, by how much should the Indian rupee appreciate or depreciate with respect to the dollar over a year?
b. Suppose that the annual return on the is 12 percent in Indian rupees, and the Indian rupee depreciated with respect to the dollar by 5 percent. Also suppose that an Indian institutional investor also held a with the same composition. Compare the real returns for both investors, and discuss why they do or do not differ from one another. Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...