Practice Exchange Rate $/yen = .009, yen/pound = 120, $/pound = 1.15 1. Is there alignment of exchange rates? D. Will arbitrage take place? . At what direction the arbitrage will take place? 1. For an investor investing $1000000, what will be the gain? - January 2022 spot yen/$ rate was 110. January 2023 spot yen/$ rate was 105. 1. Which currency did appreciate ? By how much D. Which currency did depreciate ? By how much - Nominal $/pound = 1.20. CPIusa = 115, CPIuk = 120. What is the real exchange rate (base wear 2012)? - The change in nominal exchange rate ($/pound) from 2012 to 2022 was 7%. Since 2012, nflation in US has increased by 15%, inflation in UK has increased by 19%. What is the real change in exchange rate?
Practice Exchange Rate $/yen = .009, yen/pound = 120, $/pound = 1.15 1. Is there alignment of exchange rates? D. Will arbitrage take place? . At what direction the arbitrage will take place? 1. For an investor investing $1000000, what will be the gain? - January 2022 spot yen/$ rate was 110. January 2023 spot yen/$ rate was 105. 1. Which currency did appreciate ? By how much D. Which currency did depreciate ? By how much - Nominal $/pound = 1.20. CPIusa = 115, CPIuk = 120. What is the real exchange rate (base wear 2012)? - The change in nominal exchange rate ($/pound) from 2012 to 2022 was 7%. Since 2012, nflation in US has increased by 15%, inflation in UK has increased by 19%. What is the real change in exchange rate?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Practice Exchange Rate
1- $/yen = .009, yen/pound= 120, $/pound= 1.15
a. Is there alignment of exchange rates?
b. Will arbitrage take place?
c. At what direction the arbitrage will take place?
d. For an investor investing $1000000, what will be the gain?
2- January 2022 spot yen/$ rate was 110. January 2023 spot yen/$ rate was 105.
a. Which currency did appreciate
b. Which currency did depreciate
? By how much
? By how much
?
?
3- Nominal $/pound = 1.20. CPIusa = 115, CPIuk = 120. What is the real exchange rate (base
year 2012)?
4- The change in nominal exchange rate ($/pound) from 2012 to 2022 was 7%. Since 2012,
inflation in US has increased by 15%, inflation in UK has increased by 19%. What is the real
change in exchange rate?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe2e59f5c-d443-4ef5-a624-52521fb4597f%2Ffb703620-93a6-4f63-a612-e3bfb2e9f12f%2Ffdbdyha_processed.png&w=3840&q=75)
Transcribed Image Text:Practice Exchange Rate
1- $/yen = .009, yen/pound= 120, $/pound= 1.15
a. Is there alignment of exchange rates?
b. Will arbitrage take place?
c. At what direction the arbitrage will take place?
d. For an investor investing $1000000, what will be the gain?
2- January 2022 spot yen/$ rate was 110. January 2023 spot yen/$ rate was 105.
a. Which currency did appreciate
b. Which currency did depreciate
? By how much
? By how much
?
?
3- Nominal $/pound = 1.20. CPIusa = 115, CPIuk = 120. What is the real exchange rate (base
year 2012)?
4- The change in nominal exchange rate ($/pound) from 2012 to 2022 was 7%. Since 2012,
inflation in US has increased by 15%, inflation in UK has increased by 19%. What is the real
change in exchange rate?
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VIEWStep 4: 2. Which exchange rate depreciates and which appreciate
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