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What is the solution for these 3 questions with all the work shown? For all the following questions, use the exact-form formulas unless specified otherwise.
What is the solution for these 3 questions with all the work shown? For all the following questions, use the exact-form formulas unless specified otherwise. If one hair cut costs $30 in Chicago, the U.S. and S$40 in Singapore, respectively, calculate the S$/$ FX rate and $/S$ FX rate, assuming the law of one price holds. Suppose a Big Mac in Mexico costs P6 (P = peso = local currency), and the same Big Mac in the U.S. costs $3. The actual exchange rate is $0.6/P. If the PPP holds, which currency is undervalued? By how much? Which currency is overvalued? By how much? Show calculations. Assume that one-year interest rates are 4.40% in the United States and 3.75% in the Euro zone. The spot rate between the Euro and the dollar is 0.8250/$. Assuming that the international Fisher effect holds, calculate the expected /$ exchange rate one year from now
What is the solution for these 3 questions with all the work shown?
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