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1) The following table contains exchange rate data for five countries: Country Big Mac Actual Price in Exchange Big Mac Price in $ Implied
1) The following table contains exchange rate data for five countries: Country Big Mac Actual Price in Exchange Big Mac Price in $ Implied PPP of $ Over/under valuation (%) Local Rate Currency U.S. $3.20 $1.00/$ Norway K30.00 K10.25/$ Sweden K28.75 K10.10/$ Finland 2.85 0.95/$ Iceland K410 K145/$ a) Compute the Big Mac price (in dollars) in each country. b) Compute the PPP-implied exchange rate for each currency. c) Compute the percentage over/undervaluation for each currency.
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Basic Finance An Introduction to Financial Institutions Investments and Management
Authors: Herbert B. Mayo
10th edition
1111820635, 978-1111820633
