The US price of a base model iPhone 11 is USD700. The Singapore price for the same phone is SGD1,150. The exchange rate is 1.36SGD to 1USD. Which of the following is correct? 1. Based on iPhone prices, the USD is undervalued when compared to the SGD. 2. Based on iPhone prices, the PPP exchange rate is 1.64SGD to 1USD. 3. There is an incentive to purchase iPhone 11's in Singapore to sell in the US. O. 1 and 3 only. O. 1, 2 and 3. O. 2 only. O. 3 only. O. 1 and 2 only.

The US price of a base model iPhone 11 is USD700. The Singapore price for the same phone is SGD1,150. The exchange rate is 1.36SGD to 1USD. Which of the following is correct? 1. Based on iPhone prices, the USD is undervalued when compared to the SGD. 2. Based on iPhone prices, the PPP exchange rate is 1.64SGD to 1USD. 3. There is an incentive to purchase iPhone 11's in Singapore to sell in the US. O. 1 and 3 only. O. 1, 2 and 3. O. 2 only. O. 3 only. O. 1 and 2 only.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter27: Multinational Financial Management

Section: Chapter Questions

Problem 8P

See similar textbooks

Similar questions

A computer cost $1,300 in the United States. The same computer costs € 1,100 euros in Europe. Assuming that the purchasing power parity( PPP) strictly holds, what is the spot exchange rate between dollar and the euro?
If the current USDJPY exchange rate is 135.00 Japanese yen per U.S. dollar, the price of a Big Mac hamburger in the United States is $3.41, and the price of a Big Mac hamburger in Japan is 380 yen, then other things equal, the Big Mac hamburger in Japan is ______________ (over-valued; under-valued; fairly-valued).
Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4353 per Singapore dollar. You have just placed an order for 38,260 motherboards at a cost to you of S148 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $118 each. What is the break-even exchange rate?
Suppose your company imports computer motherboards from Singapore. The exchange rate is $1.4878 per Singapore dollar. You have just placed an order for 41107 motherboards at a cost to you of S147 Singapore dollars each. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $118 each. What is the break-even exchange rate? NOTE: Enter the PERCENTAGE number rounding to two decimals.
The 6-month interest rate in the US is 12.25% p.a. The 6-month interest rate in Canada is 15.25% p.a. The spot exchange rate is USD0.8203/CAD and the 6-month forward exchange rate is USD0.8113/CAD. (1) Are interest rates and forward rate in equilibrium? (2) For a transaction size of US$700,000, how can an investor take advantage of the situation without taking undue risks? Ignore transaction costs and income taxes.
The most recent currency exchange rate between the British Pound (GBP) and the US Dollar (US) is 1.25 (GBP) to 1 (US). You are planning on making a trip to England; and want to buy GBP with your $1,000 (US). How many GBP can you buy? Provide the amount to the nearest Pound with no other description. If your answer is 1,200.60 pound, put 1201