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9) Consider the hamburger standard. A hamburger costs $2.30 in the US.. The same hamburger costs POUNDS 1.50 in UK. The actual exchange rate is
9) Consider the hamburger standard. A hamburger costs $2.30 in the US.. The same hamburger costs POUNDS 1.50 in UK. The actual exchange rate is $1.5/POUND. This suggests that in currency markets: a) pound is overvalued relative to $. b) $ is overvalued relative to pound. c) none of the above. 10) (5 points) A US firm has E denominated debt for one year at 15% interest. During the year, E depreciates by 15% relative to the $. The effective cost of debt in dollar terms ignoring tax effects is: % 11) An American investor realizes 50% return (in $ terms) in one year, on an investment in Mexico. Si = Ps 2/$. So = Ps 3/$ Returns in Peso terms must be: a) 100% b) -20% c) 0% d) -53.33% e) 50%
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