According to the Big Mac Index,the dollar interest rate on U.S.and European bonds should be the same.Otherwise,there would be no arbitrage opportunities for investors.

Question

Quizplus · Accepted Answer

The Big Mac Index, created by The Economist, is a tool to measure purchasing power parity (PPP) between nations, using the price of a McDonald's Big Mac as the benchmark. It does not directly relate to or predict interest rates on bonds in the U.S. and Europe. Interest rates can differ due to various factors including monetary policy, inflation expectations, and economic conditions, independent of PPP or the Big Mac Index. Arbitrage opportunities in financial markets can exist even when the Big Mac Index suggests a PPP imbalance.

According to the Big Mac Index,the Dollar Interest Rate on U.S.and