1. Guest Professor Bond - James Bond - recently noted prices for one of his favorite cocktails - a Vesper Martini - at exclusive bars in Louisville, London, Royale-les-Faux, Kingston, Istanbul, and Geneva. Bond also carefully noted prevailing spot exchange rates when submitting expense reports to Miss Moneypenny back at Universal Exports. Below are Bond's data. Complete the exhibit and construct a Vesper Martini Index of absolute purchase power parity (PPP) of these respective currencies vs. the US dollar. Calculate dollar-equivalent prices as $#.###. Show exchange rates to the same decimal precision as the spot rates shown in the sccond column. Calculate the percentage misvaluation as +/- #.##%. Spot exchange rate (a) USD-equivalent price Local price of Vesper Martini Location (b) PPP-consistent exchange rate % over (under) valuation Louisville, Kentucky USD 10.00 USD 10.000 London, England $1.340 GBP/USD GBP 7.00 USD 9.380 -6.20% a $ GBP/USD Royale-les-Eaux, France $1.200 ECR/USD EUR 8.00 USD 9.600 b % $1.250 EUR/USD Kingston, Jamaica 145.0 USD/IMD JMD 1,400 USD 9.655 % 140.0 USD/JMD) Istanbul, Turkey 7.850 USD/TRY TRY 65.00 USD 8.280 d -17.20% USD/TRY Geneva, Switzerland 0.900 CSD/CHE CHF 10.50 USD 11.667 % USD/CHE Ian Fleming Casino Royale For direct exchange rates (e.g., AUD/USD): US dollar equivalent price = PAUD X AUD/USD PPP-implicd exchange rate (AUD/USD) = Puso PAUD +/-% valuation = Quoted exchange rate 1 PPP-implied exchange rate For indirect exchange rates (e.g., USD/MXN): US dollar equivalent price = PMXN - USD/MXN PMXN PPP-implicd exchange rate (USD/MXN) = PUSD +/-% valuation = PPP-implied exchange rate Quoted exchange rate 1 USD equivalent price For either quotation method, % under (over) valuation = -1 USD price ($10) * The recipe for a Vesper Martini - as ordered by James Bond in Ian Fleming's novel Casino Royale (1953) and named in honor of the alluring but doomed Vesper Lynd - is: "Three measures of Gordon's one of vodka, half a measure of Kina Lillet, Shake it very well until it's ice-cold, then add a large thin slice of lemon peel." The locations identified in the exhibit correspond to settings for Ian Fleming's novels Goldfinger, Moonraker, Casino Royale, Dr. No, From Russia with love, and On Her Majesty's Secret Service 1. Guest Professor Bond - James Bond - recently noted prices for one of his favorite cocktails - a Vesper Martini - at exclusive bars in Louisville, London, Royale-les-Faux, Kingston, Istanbul, and Geneva. Bond also carefully noted prevailing spot exchange rates when submitting expense reports to Miss Moneypenny back at Universal Exports. Below are Bond's data. Complete the exhibit and construct a Vesper Martini Index of absolute purchase power parity (PPP) of these respective currencies vs. the US dollar. Calculate dollar-equivalent prices as $#.###. Show exchange rates to the same decimal precision as the spot rates shown in the sccond column. Calculate the percentage misvaluation as +/- #.##%. Spot exchange rate (a) USD-equivalent price Local price of Vesper Martini Location (b) PPP-consistent exchange rate % over (under) valuation Louisville, Kentucky USD 10.00 USD 10.000 London, England $1.340 GBP/USD GBP 7.00 USD 9.380 -6.20% a $ GBP/USD Royale-les-Eaux, France $1.200 ECR/USD EUR 8.00 USD 9.600 b % $1.250 EUR/USD Kingston, Jamaica 145.0 USD/IMD JMD 1,400 USD 9.655 % 140.0 USD/JMD) Istanbul, Turkey 7.850 USD/TRY TRY 65.00 USD 8.280 d -17.20% USD/TRY Geneva, Switzerland 0.900 CSD/CHE CHF 10.50 USD 11.667 % USD/CHE Ian Fleming Casino Royale For direct exchange rates (e.g., AUD/USD): US dollar equivalent price = PAUD X AUD/USD PPP-implicd exchange rate (AUD/USD) = Puso PAUD +/-% valuation = Quoted exchange rate 1 PPP-implied exchange rate For indirect exchange rates (e.g., USD/MXN): US dollar equivalent price = PMXN - USD/MXN PMXN PPP-implicd exchange rate (USD/MXN) = PUSD +/-% valuation = PPP-implied exchange rate Quoted exchange rate 1 USD equivalent price For either quotation method, % under (over) valuation = -1 USD price ($10) * The recipe for a Vesper Martini - as ordered by James Bond in Ian Fleming's novel Casino Royale (1953) and named in honor of the alluring but doomed Vesper Lynd - is: "Three measures of Gordon's one of vodka, half a measure of Kina Lillet, Shake it very well until it's ice-cold, then add a large thin slice of lemon peel." The locations identified in the exhibit correspond to settings for Ian Fleming's novels Goldfinger, Moonraker, Casino Royale, Dr. No, From Russia with love, and On Her Majesty's Secret Service
