Question: 3. Given a spot exchange rate quote for USD/CHF at 1.75, and expected inflation rates for CHF at 3.0%/year and USD at 6.0%/year, according to

3. Given a spot exchange rate quote for USD/CHF at 1.75, and expected inflation rates for CHF at 3.0%/year and USD at 6.0%/year, according to Purchasing Power Parity (PPP), what is the expected USD/CHF spot exchange rate in one year? Would this expected rate require Absolute PPP or Relative PPP to hold?

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