Suppose Cho is considering emigrating from her home country.A fictional country of Flaxon has the same policies and institutions
1 answer:
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Answer:
invest = $96,914
so correct option is d. $96,914
Explanation:
given data
forward rate of the Swiss franc = $.50
spot rate of the Swiss franc = $.48
pay a sum = SF200,000
solution
we know Borrow is here
Borrow =
Borrow = SF190,476
and
when we convert it will be
Convert SF190,476 is
Convert = SF190,476 × $.48 = $91,428
so investment at 6 % is
Invest = 6 % of $91,428 + $91,428
invest = $5485.68 + $91,428
invest = $96,914
so correct option is d. $96,914
Answer:
Australia has purchasing-power parity with the U.S.
Explanation:
A basket of goods costs $800 in the US. The same basket costs 1,000 euros in France and 960 Australian dollars in Australia.
The nominal exchange rate for euros is .80 euros per U.S. dollar and for Australian dollars, it is 1.2 Australian dollars per U.S. dollar.
The purchasing power parity theory compares the currency of two countries through a basket of goods. The currency of the two countries is in equilibrium or is at par if a basket of goods cost the same in both the countries.
This method compares the economic productivity and standard of living in two countries.
Converting the value of basket in France into US dollars,
=
= $1,250
Converting the value of basket in Australia into US dollars,
=
= $800
The cost of the basket of goods is same in Australia. This indicates that Australia has purchasing-power parity with the U.S.