I.The IPCs can be linked together to provide a neat benchmark for equilibrium exchange rate determination. Before this benchmark equation may be derived, we have to assume: (Select all that apply) (2 marks)

Select one or more:a.

The forward exchange rate will be the future spot exchange rate

b.

The real interest rate differential between two regions reflects their inflation rate differentials

c.

The percentage change in prices in the foreign exchange market just offsets differences of inflation rates between two trading partners

d.

Market participants form beliefs about exchange rates based on their different sources of private information