1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
strojnjashka [21]
3 years ago
6

Suppose in 1992, the average price level in Pacifica was 100, and that in Atlantica it was also 100. In the foreign exchange mar

ket 1 Pacifica pound was exchanged for 1 Atlantica mark. In 2012, the price level in Pacifica had risen to 280 and the price level in Atlantica had risen to 360. According to the relative purchasing power parity (PPP) theory, what should the pound-mark exchange rate be in 2012? If the actual pound per mark exchange rate is 0.5 pound/mark in 2012, is the mark overvalued or undervalued relative to its PPP value?
Business
1 answer:
wolverine [178]3 years ago
8 0

Answer:

a. 1 Pound/1.29 or 0.78 Pound/Mark

b. Overvalued

Explanation:

a. What should the pound-mark exchange rate be in 2012?

Ratio of Pacifica pound to Atlantica mark in 2012 = 360/280 = 1.29

Or,

Ratio of Atlantica mark to Pacifica pound in 2012 = 280/360 = 0.78

Therefore, according to the relative purchasing power parity (PPP) theory, one Pacifica pound should equal to 1.29 Atlantica mark, i.e. 1 Pound/1.29 Mark.

This can also be stated differently that 1  Atlantica mark should equal to 0.78 Pacifica pound, i.e. 0.78 Pound/Mark.

b. If the actual pound per mark exchange rate is 0.5 pound/mark in 2012, is the mark overvalued or undervalued relative to its PPP value

Since the PPP pound per mark exchange rate value estimated in a above is 0.78 Pound/ Mark is higher than the actual pound per mark exchange rate of 0.5 pound/mark in 2012, mark is therefore overvalued.

You might be interested in
Dombey's "heavy gold watch chain" and "trim blue coat" suggest that A) he is a humble man of the people. B) he once belonged to
Katena32 [7]
The answer would be D. Think of his nice clothing and gold. This shows that this person has a lot of money, showing success.
4 0
3 years ago
Read 2 more answers
Pulaski Plumbing Supply is planning to bring a new type of valve to market and is conducting a break-even analysis. For this ana
vekshin1

Answer:

break-even point (BEP) = 25,000 items

Explanation:

given data

Selling price  = $2.50

Fixed costs = $10,000

Variable cost = $2.10

solution

we know that Revenue is sum of  Fixed costs and  variable costs

so we use here contribution margin method that is

Contribution margin = $ 2.50 - $ 2.10

Contribution margin  = $ 0.4

so

break-even point (BEP) for the valve is here

break-even point (BEP) = fixed cost ÷ Contribution margin    ...................1

put here value

break-even point (BEP) = \frac{10000}{0.4}  

break-even point (BEP) = 25,000 items

4 0
3 years ago
n an attempt to have funds for a down payment in five years, James Dupont plans to save $3,800 a year for the next five years. W
Galina-37 [17]

Answer:

$20,582.03

Explanation:

For this question, we have to determine the future value that is shown on the attachment. Kindly find it below:

Data provided in the question

NPER = 5 years

PMT = $3,800

Rate of interest = 4%

PV = $0

The formula is shown below:

= -FV(Rate;NPER;PMT;PV;type)

So, after solving this, the future value is $20,582.03

6 0
3 years ago
The risk-free rate of return is 3% while the market rate of return is 12%. Delta Company has a historical beta of .85. Today, th
Anton [14]

Answer:

2.7%

Explanation:

Calculation for the amount of the change in the expected rate of return for Delta Company based on this revision to beta

First step is to calculate the Expected rate of return for Delta Company stock before adjustment

Expected rate of return for Delta Company stock before adjustment =3+.85(12-3)

Expected rate of return for Delta Company stock before adjustment =3+.85(9)

Expected rate of return for Delta Company stock before adjustment =3+7.65

Expected rate of return for Delta Company stock before adjustment=10.65%

Second step is to calculate the Revised expected return with new beta

Revised expected return with new beta = 3 + 1.15( 12 - 3)

Revised expected return with new beta=3+1.15(9)

Revised expected return with new beta=3+10.35

Revised expected return with new beta=13.35%

Last step is to calculate the Amount of change in the expected rate of return

Using this formula

Amount of change in the expected rate of return=Revised expected return with new beta-Expected rate of return for Delta Company stock before adjustment

Let plug in the formula

Amount of change in the expected rate of return = 13.35% - 10.65%

Amount of change in the expected rate of return=2.7%

Therefore the amount of the change in the expected rate of return for Delta Company based on this revision to beta will be 2.7%

4 0
2 years ago
Alcohol is an __way to deal with the stress of every day life
omeli [17]

Answer:

the Link Between Stress and Alcohol. ... One way that people may choose to cope with stress is by turning to alcohol. Drinking may lead to positive feelings and relaxation, at least in the short term. Problems arise, however, when stress is ongoing and people continue to try and deal with its effects by drinking alcohol.

Explanation:

3 0
3 years ago
Other questions:
  • Every year a new version of the flu vaccine is made using a mixture of strains. The strains are chosen based on surveillance and
    14·1 answer
  • Suzanna decided not to pay federal income tax, saying that paying federal income tax is optional. Describe two possible conseque
    6·2 answers
  • Cazden Motors' stock is trading at $30 a share. Call options on the company's stock are also available, some with a strike price
    5·1 answer
  • If total spending rises from one year to the next, then a. the economy must be producing a larger output of goods and services.
    9·1 answer
  • Your spouse is a teacher at the local elementary school. Which retirement plan would she most likely have?
    13·1 answer
  • One major role of firms is to manage risk. Consumers do not want to pay for products of unknown quality or where the delivery da
    5·1 answer
  • What are characteristics of a good service provider​ operations?
    12·1 answer
  • Which of the following statements regarding conducting marketing research in a foreign country is​ correct? A. Good secondary da
    11·1 answer
  • Which type of tutoring does the school normally offer
    12·1 answer
  • Zina Balaskas (57) is single and earned $3,250 in wages. Because she has a large amount of investment income, she would like to
    13·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!