If Given, USD-JPY 104.9400 USD-CAD 1.3304 1. Find the cross rate between CAD and JPY...? 2....

If Given,

USD-JPY 104.9400

USD-CAD 1.3304

1. Find the cross rate between CAD and JPY...?

2. Find the USD/JPY and USD/CAD....?

3. Based on rate above, is the cross rate between CAD and JPY what you expected it to be? ( We learned about triabgular arbitrage, and we know that most of the time triangular arbitrage is not feasible because if it is, market force will be at work to correct it)

Solutions

Expert Solution

1.
1 USD=104.94 JPY
1 USD=1.3304 CAD

Hence, 104.94 JPY=1.3304 CAD
=>1 CAD=104.94/1.3304 JPY
=>1 CAD=78.87853 JPY

2.
USD/JPY=1/104.94=0.00953

USD/CAD=1/1.3304=0.75165

3.
Yes

jeff jeffy answered 2 years ago

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