Other things equal, and assuming efficient markets, if a Honda Accord costs $18,365 in the...
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Accounting
Other things equal, and assuming efficient markets, if a Honda Accord costs $18,365 in the U.S. then at an exchange rate of $1.43/, the Honda Accord should cost _____________ in Great Britain.
(a) 0.0779
(b) 0.0679
(c) 12,843
(d) 10,843
(e) none of the above
One year ago the spot rate of U.S. dollars for Canadian dollars was $1/C$1. Since that time the rates of inflation in the U.S. and Canada have been 6% and 2% respectively. Based on the theory of Relative PPP, the current spot exchange rate of U.S. dollars for Canadian dollars should be approximately _______________.
(a) $1.04/C$1
(b) C$1.04/$1
(c) $1/C$1
(d) $0.96/C$1
(e) none of the above
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