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Assume the CNY:USD exchange rate is CNY 7 : $1. If the expected long-term annual...

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Finance

Assume the CNY:USD exchange rate is CNY 7 : $1. If the expected long-term annual inflation rate in China is expected to be 5% and in US expected to be 2%, what is your best prediction for next year's CNY:USD exchange rate, using inflation rates as your guide:

A. 6.91:1

B. 7.10:1

C. 7.21:1

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