Suppose that the price of a bottle of wine is €25 in Paris, and the wine is sold at $40 in New York. What will be the exchange rate if the law of one price holds?
Price of wine bottle in Paris = €25
Price of wine bottle in New York = $40
Law of one Price holds means that the Price of a commodity will be same globally with exchange rate factor.
Exchange Rate = Price in Paris/Price in New York
= €25/$40
= €0.625 per $ or $1.60 per €
Suppose that the price of a bottle of wine is €25 in Paris, and the wine...
Suppose that the price of a bottle of wine is €25 in Paris, and the wine is sold at $40 in New York. What will be the exchange rate if the law of one price holds?
Suppose that the price of a bottle of wine is €25 in Paris, and the wine is sold at $40 in New York. What will be the exchange rate if the law of one price holds? please show steps
Suppose that the price of a bottle of wine is €25 in Paris, and the wine is sold at $40 in New York. What will be the exchange rate if the law of one price holds? please show steps
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