M N o E H 1 Question 1 Comparing Cheap Dates Around the World (4 marks) 2 Comparison of prices or costs across different country and currency environments requires the translation of the local currency into a single 3 common currency. This is most meaningful when the comparison is for the identical or near-identical product or service across countries. Deutsche 4 Bank has recently started publishing a comparison of cheap dates -- and evening on the town for two to eat at McDonald's, see a movie and drink 5 a beer. Once all costs are converted to a common currency, the US dollar in this case, the cost of the date can be compared across cities relative 6 to the base case of a cheap date in USD in New York City. 7 After completing the table below, answer the following questions 9 a Which city in the table truly offers the cheapest date? 10 b. Which city in the table offers the most expensive cheap date? 11 c. If the exchange rate in Moscow on the Russian ruble (RUB) was 0.04200, instead of 0.0283, what would be the USD price? d. If the exchange rate in Shangahi was CNY 6.66 = 1 USD, what would be its cost in USD and relative to a cheap date in New York City? 12 13 14 Cheap Date in Is USD Relative to NYC 15 16 Country 17 Australia 18 Brazil 19 Canada 20 China 21 France 22 Germany 23 Hong Kong 24 India 25 Indonesia 26 Japan 27 Malaysia 28 Mexico 29 New Zealand 30 Phillipines 31 Russia 32 Singapore 33 South Africa 34 United Kingdom 35 United States 36 United States 37 City Sydney Rio de Janeiro Ottawa Shanghai Paris Berlin Hong Kong Mumbai Jakarta Tokyo Kuala Lumpur Mexico City Auckland Manila Moscow Singapore Cape Town London New York City San Francisco Cheap Date in Local Currency AUD 111.96 BRL 135.43 CAD 78.33 CNY 373.87 EUR 75.57 EUR 76.49 HKD 467.03 INR 1,379.64 IDR 314,700 JPY 10,269.07 MYR 117.85 MXN 423.93 NZD 111.52 PHP 1,182.88 RUB 2,451.24 SGD 77.89 ZAR 388.58 GBP 73.29 USD 93.20 USD 88.72 Exchange Rate Quote USD AUD USD = 1 BRL USD = 1 CAD USD 1 CNY USD = 1 EUR USD 1 EUR USD - 1 HKD USD = 1 INR USD - 1 DR USD 1 JPY USD = 1 MYR USD = 1 MXN USD - I NZD USD = 1 PHP USD - 1 RUB USDI SGD USD = 1 ZAR USD 1 GBP 1 USD 1 USD Exchange Rate 7 April 2014 0.9290 0.4363 0.9106 0.1619 1.3702 1.3702 0.1289 0.0167 0.0001 0.0097 03048 0.0769 0.8595 0.0222 0.0283 0.7939 0.0946 1.6566 1.0000 1.0000 M N o E H 1 Question 1 Comparing Cheap Dates Around the World (4 marks) 2 Comparison of prices or costs across different country and currency environments requires the translation of the local currency into a single 3 common currency. This is most meaningful when the comparison is for the identical or near-identical product or service across countries. Deutsche 4 Bank has recently started publishing a comparison of cheap dates -- and evening on the town for two to eat at McDonald's, see a movie and drink 5 a beer. Once all costs are converted to a common currency, the US dollar in this case, the cost of the date can be compared across cities relative 6 to the base case of a cheap date in USD in New York City. 7 After completing the table below, answer the following questions 9 a Which city in the table truly offers the cheapest date? 10 b. Which city in the table offers the most expensive cheap date? 11 c. If the exchange rate in Moscow on the Russian ruble (RUB) was 0.04200, instead of 0.0283, what would be the USD price? d. If the exchange rate in Shangahi was CNY 6.66 = 1 USD, what would be its cost in USD and relative to a cheap date in New York City? 12 13 14 Cheap Date in Is USD Relative to NYC 15 16 Country 17 Australia 18 Brazil 19 Canada 20 China 21 France 22 Germany 23 Hong Kong 24 India 25 Indonesia 26 Japan 27 Malaysia 28 Mexico 29 New Zealand 30 Phillipines 31 Russia 32 Singapore 33 South Africa 34 United Kingdom 35 United States 36 United States 37 City Sydney Rio de Janeiro Ottawa Shanghai Paris Berlin Hong Kong Mumbai Jakarta Tokyo Kuala Lumpur Mexico City Auckland Manila Moscow Singapore Cape Town London New York City San Francisco Cheap Date in Local Currency AUD 111.96 BRL 135.43 CAD 78.33 CNY 373.87 EUR 75.57 EUR 76.49 HKD 467.03 INR 1,379.64 IDR 314,700 JPY 10,269.07 MYR 117.85 MXN 423.93 NZD 111.52 PHP 1,182.88 RUB 2,451.24 SGD 77.89 ZAR 388.58 GBP 73.29 USD 93.20 USD 88.72 Exchange Rate Quote USD AUD USD = 1 BRL USD = 1 CAD USD 1 CNY USD = 1 EUR USD 1 EUR USD - 1 HKD USD = 1 INR USD - 1 DR USD 1 JPY USD = 1 MYR USD = 1 MXN USD - I NZD USD = 1 PHP USD - 1 RUB USDI SGD USD = 1 ZAR USD 1 GBP 1 USD 1 USD Exchange Rate 7 April 2014 0.9290 0.4363 0.9106 0.1619 1.3702 1.3702 0.1289 0.0167 0.0001 0.0097 03048 0.0769 0.8595 0.0222 0.0283 0.7939 0.0946 1.6566 1.0000 1.0000
