whereas currency diversification is most effective with currencies that are Question 15 A cross-hedging strategy is most effective with currencies that are expected to depreciate; expected to appreciate highly negatively correlated; not highly correlated highly positively correlated; not highly correlated expected to appreciate; expected to depreciate Question 16 Assume a two-country World: Country A and Country 8. Which of the following is correct about purchasing power parlty (PPP) as related to these two countries? If Country A's interest rate exceeds Country B's inflation rate, Country A's currency will strengthen. of Country A's inflation rate exceeds Country B's inflation rate, Country A's currency will weaken. of Country A's interest rate exceeds Country B's inflation rate, Country A's currency wil weaken. If Country B's inflation rate exceeds Country A's inflation rate, Country A's currency will weaken