Referring to Reading 16, practice problem 19B, question says:
Exchange rate of 2.7 fips per 1 CHF is (implied by PPP).
Exchange rate of 2.0 fips per 1 CHF (actual).
If we take inverses, we have
Exchange rate of 0.37 CHF per 1 fip (implied by PPP).
Exchange rate of 0.50 CHF per 1 fip (actual).
So 1 fip is getting us 0.5 CHF, when PPP says it should be getting us only 0.37 CHF, so hence it is overvalued, is this correct?
Exchange rate of 2.7 fips per 1 CHF is (implied by PPP).
Exchange rate of 2.0 fips per 1 CHF (actual).
If we take inverses, we have
Exchange rate of 0.37 CHF per 1 fip (implied by PPP).
Exchange rate of 0.50 CHF per 1 fip (actual).
So 1 fip is getting us 0.5 CHF, when PPP says it should be getting us only 0.37 CHF, so hence it is overvalued, is this correct?