The following options are all important reasons to study the theory of

The following options are all important reasons to study the theory of PPP EXCEPT:

A) it provides a baseline forecast of future exchange rates that is usually considered whenever it is necessary to forecast future cash flows in different currencies.
B) deviations from PPP significantly affect the profitability of firms.
C) it is particularly useful in assessing cost-of-living differences across countries
D) the deviations from the theory are very small when it comes to the determination of exchange rates

ANSWER

Answer: D