Explain international business involves currency market

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Reference no: EM1317473

Explain International business involves currency market

1. Exchange rate If British pounds sell for $1.50 (U.S.) per pound, what should dollars sell for in pounds per dollar?

2. Currency appreciation Suppose that 1 Danish krone could be purchased in the foreign exchange market for 14 U.S. cents today. If the krone appreciated 10 percent tomorrow against the dollar, how many krones would a dollar buy tomorrow?

3. Purchasing power parity In the spot market 7.8 Mexican pesos can be exchanged for 1 U.S. dollar. A compact disc cost $15 in the United States. If purchasing power parity (PPP) holds, what should be the price of the same disc in Mexico?

Reference no: EM1317473

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