1. Starbucks opened its first store in Zagreb, Croatia in October 2015. In Zagreb, the price of a tall vanilla latte is 28.50 kn. In New York City, the price of a tall vanilla latte is $3.65. The exchange rate between Croatian kunas (kn) and U.S. dollars is kn 6.5299/$. According to purchasing power parity, is the Croatian kuna overvalued or undervalued?

2. Hilton a Venezuelan company, wishes to borrow $9,000,000 for eight weeks. A rate of 7.250% per annum is quoted by potential lenders in New York, Great Britain, and Switzerland using, respectively, international, British, and the SwissEurobond definitions of interest (day count conventions). From which source should Hilton borrow?