Homework Answers
Implied exchange rate = Price of Big Mac in country / Price of Big Mac in US
| Country | Big Mac Price | Implied exchage rate | Actual exchage rate | Over valued or Under valued |
| Brazil | 7.60 | 2.08 | 1.58 | Over valued |
| Poland | 7.20 | 1.97 | 2.03 | Under valued |
| South korea | 3250.00 | 890.41 | 1018.00 | Under valued |
| Czech Republic | 67.10 | 18.38 | 14.50 | Over valued |
Blank 1: Overvalued
Blank 2: Under Valued
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If a Big Mac is selling in the United States for $3.65, what is the implied exchange rate between each of the currencie...
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the...
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that both the zloty and dollar are undervalued. the dollar is undervalued. the dollar is overvalued. the zloty is overvalued.
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rat...
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rate and then state whether the currency is overvalued or undervalued versus the U.S. dollar. (Enter your responses rounded to two decimal places.) Implied Exchange Rate Actual Exchange Rate Country Big Mac Price Overvalued or Undervalued Chile 2,100 pesos 715.22 pesos/$ pesos/$ shekels/$ Israel 16.9 shekels 3.94 shekels/S Russia 114 rubles 74.66 rubles/S rubles/$ NZS/$ New Zealand 5.9...
1) Assume that a Big Mac costs $3.06 in the U.S. and £1.85 in the U.K....
1) Assume that a Big Mac costs $3.06 in the U.S. and £1.85 in the U.K. Calculate the implied absolute PPP exchange rate $/£. If the actual exchange rate turns out to be $/£ = 1.8519 then show whether the British Pound is overvalued or undervalued relative to the dollar and whether it costs more or less in dollars (pounds) to buy Big Mac in the U.K. (U.S.) 2) Assume that a Big Mac costs $3.25 in the U.S. and...
Suppose that the price of the MacDonald’s Big Mac hamburger in the United States is $...
Suppose that the price of the MacDonald’s Big Mac hamburger in the United States is $ 4 , and the price of the Big Mac hamburger in Mexico is 100 peso . Calculate the PPP exchange rate between the U.S. dollar and the Mexican peso . The exchange rate between the U.S. dollar and the Mexican peso is 20 Mexican peso per dollar . Is the Mexican peso overvalued or undervalued against the U.S. dollar ? If the PPP theory...
A spot exchange rate between Korean Won (KRW) and the United States Dollars (USD) is 0.420...
A spot exchange rate between Korean Won (KRW) and the United States Dollars (USD) is 0.420 USD per KRW. If the risk-free interest rate in the US is 5%per annum with continuous compounding while the risk free rate in Korea is 2%per annum with continuous compounding, what should be the futures exchange rate for a 7-month contract? *Use at least 6decimals for accuracy 0.4373 USD/KRW 0.4214 USD/KRW 0.4274 USD/KRW 0.4333 USD/KRW
A spot exchange rate between Korean Won (KRW) and the United States Dollars (USD) is 0.420...
A spot exchange rate between Korean Won (KRW) and the United States Dollars (USD) is 0.420 USD per KRW. If the risk-free interest rate in the US is 5% per annum with continuous compounding while the risk free rate in Korea is 2% per annum with continuous compounding, what should be the futures exchange rate for a 7-month contract? *Use at least 6 decimals for accuracy 0.4333 USD/KRW 0.4214 USD/KRW 0.4373 USD/KRW 0.4274 USD/KRW
Use the following table to complete assignment Suppose that on March 1 of the current year, the peso-US$ exchange rate w...
Use the following table to
complete assignment
Suppose that on March 1 of the current year, the peso-US$
exchange rate was P5/$. On March 31 of the current year, the
exchange rate stood at P8/$. Calculate the 1-month percent change
in the value of the Mexican peso (= P).
Calculate the spot Korean won-Japanese yen exchange rate in W/¥.
(Korean won = W; Japanese yen = ¥)
Calculate the spot Taiwanese dollar-euro exchange rate in T$/€.
(Taiwanese dollar = T$;...
A Big Mac costs $4.56 in the United States and 9.2 zlotys in Poland. If the exchange rate is 3 zlotys per dollar, purchasing power parity predicts that both the zloty and dollar are undervalued. the dollar is undervalued. the dollar is overvalued. the zloty is overvalued.
Assume that the Big Mac is selling for $4.93 in the United States. In the table below, fill in the implied exchange rate and then state whether the currency is overvalued or undervalued versus the U.S. dollar. (Enter your responses rounded to two decimal places.) Implied Exchange Rate Actual Exchange Rate Country Big Mac Price Overvalued or Undervalued Chile 2,100 pesos 715.22 pesos/$ pesos/$ shekels/$ Israel 16.9 shekels 3.94 shekels/S Russia 114 rubles 74.66 rubles/S rubles/$ NZS/$ New Zealand 5.9...
Use the following table to
complete assignment
Suppose that on March 1 of the current year, the peso-US$
exchange rate was P5/$. On March 31 of the current year, the
exchange rate stood at P8/$. Calculate the 1-month percent change
in the value of the Mexican peso (= P).
Calculate the spot Korean won-Japanese yen exchange rate in W/¥.
(Korean won = W; Japanese yen = ¥)
Calculate the spot Taiwanese dollar-euro exchange rate in T$/€.
(Taiwanese dollar = T$;...
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