Suppose you are a financial manager stationed in a foreign country and your boss at headquarters in New York asks you to make a prediction about the future exchange rates in the country you are currently in. You see that the economy in the country you are in has started to grow more rapidly with a lot of new foreign investments. You also see that prices are much lower in this country than they are back in the U.S. For example, you see that the price of a big mac at McDonalds is half of what it costs you at home. Would you tell your boss that you expect the value of currency in this country will increase or decrease?

As a financial manager, you have been asked to make a prediction about the future exchange rates in the country you are currently in. In order to analyze the situation and provide an informed answer, you can consider the following factors:

1. Economic growth: If the economy in the country you are in has started to grow more rapidly with significant foreign investment, it can be an indication of a strengthening economy. Foreign investments often result in increased demand for the country's currency, which can influence its value positively.

2. Purchasing power parity: The observation that prices are much lower in the foreign country compared to the U.S. indicates a lower cost of living in the foreign country. As an example, the lower price of a Big Mac at McDonald's suggests that the currency of the foreign country might be undervalued compared to the U.S. dollar.

Based on these observations, it would be reasonable to expect that the value of the currency in this country may increase. However, it is essential to note that exchange rates are influenced by numerous factors, including economic indicators, government policies, geopolitical events, and market sentiment. Therefore, it is important to conduct a more thorough analysis and consider additional factors to form a well-informed prediction.

To provide your boss with a more accurate forecast, you can conduct further research and analysis by consulting economic reports, seeking expert opinions, and studying historical exchange rate trends. Additionally, monitoring significant macroeconomic indicators such as interest rates, inflation rates, and trade balances will help you gain a comprehensive understanding of the country's economy and its potential impact on exchange rates.