Basic Concepts in International Trade
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1. In the spot market 7.8 Mexican pesos can be exchanged for 1 U.S. dollar. A compact disc cost $15 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same disc in Mexico?
2. Suppose that 1 Danish krone could be purchased in the foreign exchange market for 14 U.S. cents today. If the krone appreciated 10 percent tomorrow against the dollar, how many krones would a dollar buy tomorrow?
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Solution Summary
There are two problems. Solutions study the relationship between two currencies.
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1.
Spot exchange rate is 1 US$=7.8 Mexican Pesos
Price of ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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