Question: b) As an alternative to using a currency forward, you examine the effective forward that could be created by a synthetic (i.e., money market) hedge.

b) As an alternative to using a currency forward, you examine the effective forward that could be created by a synthetic (i.e., "money market") hedge. Describe the steps you would take to construct this hedge and calculate the effective forward rate you could achieve using the information provided above. Show your calculations. 4. For the full year of 2019, India's gross domestic product (GDP) was $2.875 trillion when measured in current U.S. dollars. However, when measured on a purchasing power parity (PPP) basis, India's GDP was $11.33 trillion. U-S- GDP was $21.43 trillion in 2019. a) Based upon this data, is the Indian rupee undervalued or overvalued relative to the U.S. dollar? Explain your answer. b) What is the real USDIINR exhange rate implied by PPP? c) Why might this analysis be awed, or at least imprecise

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