International Financial Management 2nd Edition by Geert Bekaert ,Robert Hodrick

Exercise 13

Suppose that you are trying to decide between two job offers. One consulting firm offers you $150,000 per year to work out of its New York office. A second consulting firm wants you to work out of its London office and offers you £100,000 per year. The current exchange rate is $1.65/£. Which offer should you take, and why Assume that the PPP exchange rate is $1.40/ £ and that you are indifferent between working in the two cities if the purchasing power of your salary is the same.