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In forecasting exchange rates, many practitioners use the Interest Rate Parity, Purchase Price Parity, Asset Approach, or the Balance of Payments Approach. (A) Please define and explain the above four methods of forecasting exchange rates, including their theoretical relevance. (B) If you were a CFO, what forecasting method(s) would you use for the annual budget and why? (C) If you were a CFO, what forecasting method(s) would you use for the five-year plan and why?

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