Assuming the Exchange Rate Is Measured in Direct Quotation and That

Multiple Choice

Assuming the exchange rate is measured in direct quotation and that a PPP trading rule is adopted, if the actual exchange rate is lower than the PPP rate, then:

A) the foreign currency should be bought
B) the foreign currency should be sold
C) the foreign currency should be sold short
D) the foreign currency should be sold and/or the foreign currency should be sold short