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Current quoted exchange rate

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The price of a Big Mac in the U.S. is $5.74 and the price in Australia is A$6.15. Using the Big Mac Index, one may calculate the implied PPP exchange rate. The actual quoted exchange rate is A$ 1.4436/$.  At the current quoted exchange rate, the Australian dollar appears to be:

a. Overvalued by approximately 25.8 %

b. Overvalued by approximately 34.7 %

c. Undervalued by approximately 34.7 %

d. Undervalued by approximately 25.8%

Reference no: EM132485240

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