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Could you please answer all of these question comprehensively as soon as possible, thank you so much . Thumb up for sure :) (a) Starbucks

Could you please answer all of these question comprehensively as soon as possible, thank you so much . Thumb up for sure :)

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(a) Starbucks opened its first store in Zargeb, Croatia in October, 2010. In Zargeb, the price of a tall vanilla latte is 25.70kn. In New York City, the price of a tall vanilla latte is \$2.65. The exchange rate between Croatian Kuna (kn) and U.S. Dollar is kn5.6288/$. According to the law of one price, is Croatian Kuna overvalued or undervalued? Show your calculations. ( 2 marks) (b) A corporate treasury with operations in Sydney simultaneously calls Westpac Bank in Sydney and Barclays in London. The two banks give the following quotes at the same time on the euro () : Assume the corporate treasury has AUD1,000,000 or its euro equivalent. Is it possible to make an arbitrage profit with the two exchange rate quotes? Explain your answer. Show calculations

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