ou are considering building a factory to build baseball bats to sell in the United States suming the costs are the same in every country and all n local currency, which of the following is true: a. You would prefer to build the factory in a country where you expect its currency b. You would prefer to build the factory in a country where you expect its currency c. The factory location does not matter because the selling price in USD must to weaken relative to the dollar to strengthen relative to the dollar adjust to the exchange rate for the currency where your plant is located and the USD. You do not have currency risk if you are a U.S. based company selling your finished product in the U.S 21. Ifgold costs $1,000/ounce in U.S. and 100,000/ounce in Japan, then (assuming no transaction or other costs): a. The exchange rate should be Y100:$1 b. An exchange rate of Y100:$1 creates arbitrage opportunities d. The price of gold does not influence exchange rates because neither country is on the gold standard 19. Using the current exchange rate, a basic haircut in Hong Kong cost $70 (USD) while the same haircut in Chicago costs $20 (USD). Therefore: The discrepancy disproves the theory of purchasing power parity Purchasing power parity would suggest that the currency of Hong Kong (HKD) would be expected to weaken quickly and sharply Interest rates in Hong Kong are likely much higher than in the United States None of the above a. b. c. d