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In February 2017, the US dollar - Mexican peso exchange rate was 11peso/$. The price of a hotel room in Mexico city was 1000 pesos.
- In February 2017, the US dollar - Mexican peso exchange rate was 11peso/$. The price of a hotel room in Mexico city was 1000 pesos.
- Calculate the price of the hotel room in U.S. using purchase-power parity (PPP) Theory.
- If the actual price of the hotel in U.S. is $ 120. Is the U.S. dollars undervalued or overvalued in comparison to PPP estimate?
- Education CDs for kids by Disney Inc. sells for Aus$25 in Australia and the current exchange rates are 2.45 Aus$/ between the Australian dollar and the UK pound.
- Calculate the price of the CD in U.K. using PPP?
- If the actual price of the CD in U.K. is 9 . Is the U.K. pound undervalued or overvalued in comparison to PPP estimate?
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Introduction To Derivatives And Risk Management
Authors: Robert Brooks, Don M Chance, Roberts Brooks
8th Edition
0324601212, 9780324601213
