International Finance: Putting Theory Into Practice
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 103 translation, that is, to have an idea what af ...
104 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY But this ignores price differences. What you ”really” earn is 50/5 = 10 Big- M ...
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 105 Table 3.4:PPPrates based in Big-Mac prices fr ...
106 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY Figure 3.14:LogPPPvlog actual rates,HC/USD -2 0 2 4 6 8 10 -2 0 2 4 6 8 10 log ...
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 107 Figure 3.15:PPPvactual rates,HC/USD SourceBas ...
108 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY 3.4.3 The Real Exchange Rate and (Deviations from) AbsolutePPP The real exchang ...
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 109 Figure 3.16:Real rates based on Big-Mac price ...
110 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY inflation in Freedonia was lower thanus. Below, we first show the general relat ...
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 111 Figure 3.17:[Actual Rate]/[RPPPRate] against ...
112 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY Figure 3.18:RPPPv actual rates against usd, 1965=1.00 GBP RPPP v actual 1.2^1 0 ...
3.4. TRANSLATING FC FIGURES: NOMINAL RATES, PPP RATES, AND DEVIATIONS FROM PPP 113 markets where you sell your output. For this ...
114 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY 3.5 CFO’s Summary In this chapter, we have seen how spot markets work. From the ...
3.5. CFO’S SUMMARY 115 for instance, in the BigMac data set). Also, there is a lot of variability over time, making countries mo ...
116 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY 3.6 TekNotes Technical Note 3.1 What’s wrong with theFC/HCconvention, in a text ...
3.7. TEST YOUR UNDERSTANDING 117 2.6 Test Your Understanding 2.6.1 Quiz Questions Using the following vocabulary, complete the ...
118 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY A bank is currently quoting the spot rates ofeur/usd 1.3043-1.3053 and nok/usd ...
3.7. TEST YOUR UNDERSTANDING 119 Purchasing Power Parity is based on the idea that the demand for a country’s currency is deriv ...
120 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY (a) If you accept these quotes, how manyeur,nzd, andgbpdo you have at departure ...
3.7. TEST YOUR UNDERSTANDING 121 (d)gbp/nok? What are the cross bid-ask rates for: (a)rub/chf? (b)nok/ytl? (c) dkk/eur? (d)czj ...
122 CHAPTER 3. SPOT MARKETS FOR FOREIGN CURRENCY ...
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