Relative Purchasing Power Parity is relevant because: (a) empirical tests have shown that Absolute PPP is always violated, while Relative PPP is a good predictor of short-term exchange rate exposure....

Relative Purchasing Power Parity is relevant because:

(a) empirical tests have shown that Absolute PPP is always violated, while Relative PPP is a good predictor of short-term exchange rate exposure.

(b) consumption bundles are not always comparable across countries.

(c) price levels are not stationary over time.

(d) investors care about the real return on their international portfolio investments.

(e) investors care about the nominal return on their international portfolio investments.