Foreign Exchange market

11. The price of a Big Mac Burger in Hong Kong is HKD 20.50, while the price of the same burger in Cape Town is ZAR 33.50. Suppose the actual exchange rate (ZAR/HKD) is HKD 1 = ZAR 1.7455. The Law of One Price (LOP) states that, given the HKD price of the Big Mac and the actual exchange rate, the ZAR price of the Big Mac Burger should be? a) ZAR 35.78 b) ZAR 20.50 c) ZAR 33.50 d) ZAR 11.75 e) None of the above 3 marks