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FOREIGN EXCHANGE CONT. o A bottle of champagne costs FFr 150 in a Paris wine store. The same bottle of champagne costs DM 45 in

FOREIGN EXCHANGE CONT. o A bottle of champagne costs FFr 150 in a Paris wine store. The same bottle of champagne costs DM 45 in a Frankfurt wine store. 0 What spot exchange rate establishes the Law of One Price for these two commodities? O lfthe current spot exchange rate is 3.55 FFr/DM, what is the real exchange rate? What are the units of your calculation? 0 According to your calculation, is the DM overvalued or undervalued

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