The current spot rate between euroland and the U.S. is .82 per $1.00. Expected inflation in euroland

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The current spot rate between "euroland" and the U.S. is €.82 per $1.00. Expected inflation in "euroland" is 6 percent per year and expected inflation in the U.S. is 3 percent per year. If relative purchasing power parity holds, what is the expected exchange rate in 4 years?
a) €.870 per $1.00
b) €.896 per $1.00
c) €.923 Per $1.00
d) €.951 per $1.00

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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Fundamentals of Financial Management

ISBN: 978-0324302691

11th edition

Authors: Eugene F. Brigham, ‎ Joel F. Houston

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