Calculate the real exchange rate

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Reference no: EM131580057

An investor based in the US wishes to invest in Swiss bonds with a maturity of 1 year.

Suppose that the ratio of the price levels of a typical consumption basket in the US versus Switzerland is 1 to 1.5 and the current exchange rate is $0.62 per Swiss franc.

Calculate the real exchange rate and please explain.

Reference no: EM131580057

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