In: Finance
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)
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