Could a kind soul please shed some light on the correct formulas for each? These is a discrepancy between Schweser and the CFAI sample exams.
For instance, Schweser provides the following formula for relative PPP:
E(St) = So * (1 + Infl DC) / (1 + Infl FC)
where exchange rates are quoted FC:DC.
Conversely, the formla used in one of the sample exam questions (case on Sona and Golder Island) inflation for Foreign currency is in the numerator and Domestic is in the denominator. The spot is also quoted FC:DC similar to Schweser, so it is a different formula.
There are similar issues with IRP. Anyone able to shed light on this? What are the CORRECT representations of all these relations? Thanks so much!