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USD price of BicMac in South Africa and the US are $4.50 and $3.90 respectively. PPP implied exchange rate of South African Rand is 9.50 SAR per dollar. What is the extent of SAR undervaluation or overvaluation? (find out it in percentages)

a) 15.38% Overvaluation

b) 15.38% Undervaluation

c) 13.33% Overvaluation

d) 13.33% Undervaluation

Basic Finance, Finance

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