A. According to the information presented, calculate the undervaluation or overvaluation of each coin.

Country	Big Mac Price in local currency (1)	Big Price mac in dollars (1)/(3)	implicit TPP (1) / 4.80 (USprice)= (2)	exchange rates (3)	Undervaluation (-) Overvaluation (+) Local currency(%) [(2)-(3)] / (3)
United States	4.80			1.00
Argentina	21.00			8.17
Brazil	13.00			2.22
United Kingdom	1.99			1.36
Canada	5.64			1.07
Chile	2,100.00			564.14
China	16.90			6.20
European Union	3.67			0.74
Japan	370.00			101.53
Mexico	42.00			12.93
Russia	89.00			34.84

1. What is the country with the highest undervaluation?

2. What is the country with the least overvaluation?

B. Suppose you have $1,000,000 pesos on January 1 of the year. The exchange rate is 1.00 USD = 21.2540 MXN. Banks in Mexico offer an average annual rate of 5%, while in the United States 3%, and it is expected that the exchange rate at the end of the year it will be 1.00 USD = 23.2530 MXN.

1. In what would it be convenient for you to invest your money, in pesos or in dollars?

2. How many pesos would you have at the end of the year, if you invest in dollars?

3. How many dollars if you invest in pesos? 4. What would happen if the real exchange rate at the end of the year was 1.00 USD = 19.9510?