Question: can you please do all work in steps on a paper if possible Exercises: Parity conditions in real markets and financial markets EXERCISE 2 (Purchasing

can you please do all work in steps on a paper if possible

Exercises: Parity conditions in real markets and financial markets EXERCISE 2 (Purchasing Power Parity) If a car in the Czech Republic costs 3,000,000 crowns and in Switzerland the same car costs 160,000 Swiss francs, if the Purchasing Power Parity (PPP) theory works and the transaction costs would not exist, calculate: a) The current exchange rate of these two currencies. b) The new exchange rate if expected inflations for next year are: Czech Republic: 10% Switzerland: 8%

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