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NISA [10]
3 years ago
8

PURCHASING POWER PARITY In the spot market, 19.1 Mexican pesos can be exchanged for 1 U.S. dollar. A compact disc costs $15 in t

he United States. If purchasing power parity (PPP) holds, what should be the price of the same disc in Mexico
Business
1 answer:
LiRa [457]3 years ago
8 0

Answer: $286.50

Explanation:

Purchasing Power Parity (PPP) posits that prices are the same across countries given the rate of exchange between the currencies of the countries in question.

1 USD = 19.1 Mexican pesos.

Compact disc in Mexico would cost;

= 19.1 * 15

= $286.50

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(330,000 - 22,000) / 660,00 = 0.467

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If Central Bank A cares only about keeping the price level stable and Central Bank B cares only about keeping output at its natu
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8 0
2 years ago
A free market exists
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3 years ago
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max2010maxim [7]

Answer:

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Explanation:

We have to convert the US semiannually rate to annually.

(1 + 0.078/2)^{2} -1 = 0.079521

Now this is the annual rate spected for a similar US Bonds

So we are going to calculate the present value using this rate.

Present value of an annuity of 78 for 20 years at 7.9521%

C * \frac{1-(1+r)^{-time} }{rate} = PV\\

78 * \frac{1-(1+0.079521)^{-20} }{0.079521} = PV\\

PV = 768.55

And we need to add the present value ofthe 1,000 euros at this rate

\frac{Principal}{(1 + rate)^{time} = Present Value}

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Adding those two values together

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The reasoning behind this is that an american investor will prefer at equal price an US bonds because it compounds interest twice a year over the German Bonds.

6 0
3 years ago
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Answer:

Spend 10% on clothing and 10% on entertainment.

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There are some expenses that you can lower that will not radically affect your lifestyle while other expenses should be more important.

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If you want to save money, then you should cut some costs from non essential expenses like entertainment and new clothes.

3 0
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