If according to the law of one price the current exchange rate of dollars per Br

Question

If according to the law of one price the current exchange rate of dollars per British pound is $1.75/£, then at an exchange rate of $1.85/£, the dollar is ________.
A) correctly valued
B) unknown relative valuation
C) overvalued
D) undervalued :
Answer
D Show me the answer and why the answer is D
If according to the law of one price the current exchange rate of dollars per British pound is $1.75/£, then at an exchange rate of $1.85/£, the dollar is ________.
A) correctly valued
B) unknown relative valuation
C) overvalued
D) undervalued :
Answer
D

Explanation / Answer

The more dollar equals to 1 British pound, the more undervalued the dollar gets

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