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Hi, good evening:) I am having difficulties in answering finance questions so Could you please explain about the 3 questions below? Starbucks opened its first

Hi, good evening:) I am having difficulties in answering finance questions so Could you please explain about the 3 questions below?

  1. Starbucks opened its first store in Zagreb, Croatia in October 2010.The price of a tall vanilla latte in Zagreb is 25.70kn.In New York City, the price of a tall vanilla latte is $2.65.The current exchange rate bewteen Croatian kunas (kn) and U.S. dollars is kn5.6288/$.According to purchasing power parity, is the Croatian kuna overvalued or undervalued?(1 mark) How much percentage is Croatian kuna overvalued or undervalued?

(please include your calculations and Percentage of Croatian Kuna overvalued or undervalued should follow the following format (e.g. 12.6%)).

2. Peter Simpson thinks that the U.K. pound will cost $1.43/ in six months. A 6-month currency futures contract is available today at a rate of $1.44/. If Peter was to speculate in the currency futures market, and his expectations are correct, which of the following strategies would earn him a profit?

Select one:

a.Sell a pound currency futures contract.

b.Sell pounds in six months.

c.Sell pounds today.

d.Buy a pound currency futures contract.

3.In finance, an efficient market is one in which:

Select one:

a.prices are assumed to be correct.

b.prices adjust quickly and accurately to new information.

c.all of the above

d.prices are the best allocators of capital in the macro economy.

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