Purchasing Power Parity Theory (English) - CA/CMA Final SFM | CFA Level 2

[@linusandjustine]

I decided to first pose the video so as to thank you before I could finish watching this video. I really love your energy, emphasis and simplification of a seemingly complicated subject. Thank you

[@mansitripathi2811]

Just wow! Understood everything.

[@yogitakhanna3964]

Thanks a lot sir, u make the concept east to understand in one go 👍

[@salmabelgaum9770]

Thank you sir for making this complicated topic so easy. Excellent

[@NikhilJobanputra]

Thanks and welcome

[@GoTouchSomeGrass420]

So many questions: - Where does the basket of goods come from? Were the goods produced in this country or were they imported? - How do you calculate the Big-Mac-Index for countries that don't have McDonald's? Like Russia. - How can you use Germany (with Euro) as an example? Shouldn't it be compared to the entire Euro area? - Since when is Switzerland usin the Euro? I thought they have Swiss Franken as their currency. - How reliable is this measurement?

[@NikhilJobanputra]

Switzerland definitely uses CHF as their home currency. However, Euro is still acceptable there. As Germany and Switzerland are neighboring countries, I compared these two in my example.

[@mysterylife8207]

The explanation was spot on !

[@allanbrammer8275]

thank you for this introduction. It gives me a good start for further research

[@shivashwetha-nm1yl]

It's really helpful for me sir. Excellent teachings 👌 Thank you so much sir ☺️

[@NikhilJobanputra]

It's my pleasure

[@FlorenceZimba-e1y]

Thank you sir your explanation is really nice

[@mechantgarcon6262]

9:19 Switzerland uses Swiss Franc as their currency, not Euro.

[@NikhilJobanputra]

Yes you are definitely correct. However, because Euro is accepted as a currency in Switzerland, for comparing the price in Euro, I have taken this example.

[@moganapriyakarunagaran579]

U are awesome sir . Thanks so much for the efforts

[@pushpavathi8442]

Excellent explain s sir, it s helps me lot for exams

[@sachinvijay3338]

Sir can you please make a playlist for FOREX CA For all forex concepts. it will be helpful

[@michaelschindler2870]

very nice video. thanks!

[@sachinvijay3338]

thank you sir

[@sachingkarandikar9632]

Thank you sir ....

[@joybiswas3506]

Is purchasing power parity same with currency conversion rate

[@zhypal4506]

Tq sir❤❤

[@NEF96]

Excause me but in switzerland they have CHF and not EUR

[@NikhilJobanputra]

Hello Nils, yes you are definitely correct. However, because Euro is accepted as a currency in Switzerland, for comparing the price in Euro, I have taken this example.

[@NEF96]

@@NikhilJobanputra Ah Okay, thank you for your respond.

[@GoTouchSomeGrass420]

Sorry for being not smart enough and for asking all these questions. I'm just wondering, couldn't this parity be easiely manipulated? How do we calculate the PPP between a state controlled economy and a market controlled economy? I mean, let's say we have a fictional country, which after a war split into two. Lets call the South West part Blueland and the North East part Redland. While Westland has a democracy and a market oriented economy, Redland decided it wants to be a communist society with a planned economy. Blueland is trading with the rest of the world and is importing (let's say rice) from other countries. Redland shut itself off from the rest of the world and produces its own rice, enough to feed twice its population. Due to global turbulances, Bluelands currency, the b-coin, is now decreasing and people in Blueland have to pay 10 b-coin per 1kg rice. Redland had a bad harvest this year and produced not enough rice, but put a price cap on rice, so it doesn't cost its population more than 2 r-coin per 1kg. The average income in Blueland is 2000 b-coin per month, For communist Redland, everybody recieves a monthly credit of 2000 r-coins. Blueland's GDP was 2 Billion USD last year. Redland said it had a GDP compared to 2 Billion USD last year aswell, but nobody knows for sure if that's true. Now how do we calculate the PPP of both curencies? And what would happen, if we instead of rice, wanted to by a potato?

[@NikhilJobanputra]

Thanks for asking so many questions. For learning, there is no need to be smart. You just need to be sincere. Having questions in mind is a great sign. If you need to learn any concept in detail, please contact us via WhatsApp on 7400448022

[@shubhaacharya7847]

Sir where is the answer discussed for the question. I'm intrigued by that question

[@GoTouchSomeGrass420]

I have more questions than before watching this video 😅

[@NikhilJobanputra]

It is indeed good to have questions. That indicates that you are really willing to learn.

[@tokkomarro]

Hi sir how r u