An investment bank has developed a new indicator for tracking international currency values using the cost...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
An investment bank has developed a new indicator for tracking international currency values using the cost of an iPad (8th generation) 32GB as a benchmark. The concept behind the iPad Index is based on The Economist magazine's Big Mac Index, which uses the cost of a McDonald's hamburger to compare currency values. ** Part a. (5 marks) Suppose that you are representing the investment bank. Briefly explain to the public that your iPad index could possibly be a better index than the Big Mac Index. ** Part b (5 marks) Briefly discuss why the iPad index may not be a good index for long-run comparisons (relative to the Big Mac Index). **Part c (10 marks) The prices of an iPad (8th generation) 32GB in some countries are assumed to be as follows: . 329.99 USD in the US 3499 RMB in China 429 CAD in Canada 319.97 in the UK 34,800 yen in Japan The current exchange rates are assumed to be as follows: EUSDIRMB = 0.16 EUSDICAD=0.82 EUSDIE = 1.41 EUSD/yen = 0.009 . . Show that each of the four non-US currencies (RMB,CAD,Pound, Yen) is over/under-valued based on the iPad Index. Write down your calculations. An investment bank has developed a new indicator for tracking international currency values using the cost of an iPad (8th generation) 32GB as a benchmark. The concept behind the iPad Index is based on The Economist magazine's Big Mac Index, which uses the cost of a McDonald's hamburger to compare currency values. ** Part a. (5 marks) Suppose that you are representing the investment bank. Briefly explain to the public that your iPad index could possibly be a better index than the Big Mac Index. ** Part b (5 marks) Briefly discuss why the iPad index may not be a good index for long-run comparisons (relative to the Big Mac Index). **Part c (10 marks) The prices of an iPad (8th generation) 32GB in some countries are assumed to be as follows: . 329.99 USD in the US 3499 RMB in China 429 CAD in Canada 319.97 in the UK 34,800 yen in Japan The current exchange rates are assumed to be as follows: EUSDIRMB = 0.16 EUSDICAD=0.82 EUSDIE = 1.41 EUSD/yen = 0.009 . . Show that each of the four non-US currencies (RMB,CAD,Pound, Yen) is over/under-valued based on the iPad Index. Write down your calculations.
Expert Answer:
Answer rating: 100% (QA)
Answer Part a As representatives of the investment bank we believe that the iPad Index could potentially be a superior index compared to the Big Mac Index for several reasons Technology reflects broad... View the full answer
Related Book For
Essentials Of Business Statistics
ISBN: 9780078020537
5th Edition
Authors: Bruce Bowerman, Richard Connell, Emily Murphree, Burdeane Or
Posted Date:
Students also viewed these finance questions
-
Googles ease of use and superior search results have propelled the search engine to its num- ber one status, ousting the early dominance of competitors such as WebCrawler and Infos- eek. Even later...
-
A producer of high quality executive motor cars has developed a new model which it knows to be very advanced both technically and in style by comparison with the competition in its market segment....
-
Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...
-
Write the boldfaced numbers in each problem in scientific notation. The largest of the 50 United States is Alaska, with land area of about 365,482,000 acres, while the smallest is Rhode Island, with...
-
Select a topic associated with Information Systems and its legal impact within a corporation or within society.
-
Describe the difference between an independent contractor and an employee.
-
In connection with IAS 38 Intangible Assets: (a) Define applied research and development. (b) Why is it considered necessary to distinguish between applied research and development expenditure, and...
-
Eastman Publishing Company is considering publishing a paperback textbook on spreadsheet applications for business. The fixed cost of manuscript preparation, textbook design, and production setup is...
-
Solve the following determinant: 20 110 -70-80 A 9300 B 8800 9700 8500 B
-
FeVer Beverages is a typical coffee shop that operates at Batangas. Recently, the general manager is facing a challenge about not meeting their target lead time of serving the hot coffee of 15...
-
S. John opened a textile business on 1 January 2021. His transactions for the month of January were as follows:- January 2 opened bank account and deposited cash of $65,000 and retained $10,000 in...
-
Johnson, Inc., a closely held company, wishes to engage Norr, CPA, to examine its annual financial statements. Johnson was generally pleased with the services provided by its prior CPA, Diggs, but...
-
The first standard of field work includes adequate planning of the work. Required: a. What is the objective of audit pianning? b. What information about the client is essential in planning? c....
-
Different views, opinions, approaches and methods have existed in economics for almost as long as the profession has existed. Despite this, some approaches and methods tend to rise and dominate...
-
The audit process may be divided into three categories: planning the audit, executing the audit program, and reporting the findings. Within these categories, the following specific steps must be...
-
The AICPA Division for CPA Firms provides for an SEC Practice Section and a Private Companies Practice Section. Required: a. Identify the similarities and differences in objectives between the two...
-
Exercise 6-40 (Static) Predetermined Overhead Rates (LO 6-2) Redfern Audio produces audio equipment including headphones. At the Campus Facility, it produces two wireless models, Standard and...
-
Smiths Family Fashions implemented a balanced scorecard performance measurement system several years ago. Smiths is a locally owned clothing retailer with fashions for men, women, teens, and...
-
The United States Golf Association requires that the weight of a golf ball must not exceed 1.62 oz. The association periodically checks golf balls sold in the United States by sampling specific...
-
Consolidated Power, a large electric power utility, has just built a modern nuclear power plant. This plant discharges waste water that is allowed to flow into the Atlantic Ocean. The Environmental...
-
In the book Essentials of Marketing Research, William R. Dillon, Thomas J. Madden, and Neil H. Firtle discuss a marketing research proposal to study day- after recall for a brand of mouthwash. To...
-
When a team of people is able to achieve more than what its members could by working individually, this is called ____________. (a) distributed leadership (b) consensus (c) team viability (d) synergy
-
Which statement about self-managing teams is correct? (a) They can improve performance but not satisfaction. (b) They should have limited decision-making authority (c) They should operate without any...
-
Members of a team tend to become more motivated and better able to deal with conflict during the ____________ stage of team development. (a) forming (b) norming (c) performing (d) adjourning
Study smarter with the SolutionInn App