If a Big Mac Costs $2

question 34

Multiple Choice

If a Big Mac costs $2.31 in the United States, and in Japan 250 yen, according to PPP, what is the implied exchange rate in yen/$US?

• A)0.00924
• B)108.22500
• C)119.79500
• D)250.00000

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Definitions:

Curvilinear Regression

A form of regression analysis in which the relationship between the independent variable and the dependent variable is modeled as an nth degree polynomial.

Specific Risk

A type of risk that affects a very small number of assets, such as a single stock or sector, also known as unsystematic or idiosyncratic risk.

Beta

In finance, it's a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. In statistics, it refers to the second type of error in a hypothesis test.

Regression Models

Statistical models used to estimate the relationship between a dependent variable and one or more independent variables.