Problem 31-5 Cross-Rates and Arbitrage Suppose the Japanese yen exchange rate is ¥75 = $1, and the British pound exchange rate is £1 = $1.60. a. What is the cross-rate in terms of yen per pound? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose the cross-rate is ¥125 = £1. What is the arbitrage profit per dollar used? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Problem 31-5 Cross-Rates and Arbitrage Suppose the Japanese yen exchange rate is ¥75 = $1, and the British pound exchange rate is £1 = $1.60. a. What is the cross-rate in terms of yen per pound? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Suppose the cross-rate is ¥125 = £1. What is the arbitrage profit per dollar used? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Problem 31-5 Cross-Rates and Arbitrage
|
Suppose the Japanese yen exchange rate is ¥75 = $1, and the British pound exchange rate is £1 = $1.60. |
| a. |
What is the cross-rate in terms of yen per pound? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) |
| b. | Suppose the cross-rate is ¥125 = £1. What is the arbitrage profit per dollar used? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) |
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