Please show steps to question 1 1) The euro/pound exchange rate is €1.5/£, while the euro/yen...

Please show steps to question 1

1) The euro/pound exchange rate is €1.5/£, while the euro/yen exchange rate is €.004/¥. You also observe that the pound/yen cross exchange rate is £.003/¥. Find the triangular arbitrage profit (in euros) available to someone that has access to €500,000 at an interest rate of 3%. Round intermediate steps to four decimals and your final answer to two decimals. Do not use currency symbols when entering your answer.

2) Which of the following would occur to eliminate the arbitrage opportunity found in the previous question?

The yen will appreciate against the pound.
		The pound will depreciate against the euro.
		The yen will depreciate against the euro.
		none of the above

Expert Solution

1.

2 Answer is B

LET ME KNOW IF YOU HAVE ANY DOUBTS

jeff jeffy answered 1 year ago

1. The peso/pound exchange rate is Mex$16/£ while the euro/pound exchange rate is €1.15/£ . You...

1. The peso/pound exchange rate is Mex$16/£ while the euro/pound exchange rate is €1.15/£ . You also observe that the actual peso/euro cross exchange rate is Mex$12/€ . Find the triangular arbitrage profit (in pounds) available to someone that has access to £3,000,000. Round intermediate steps to four decimals and your final answer to two decimals. Do not use the dollar sign when entering your answer. 2. Which of the following would occur to eliminate the arbitrage opportunity? a. No...

Suppose the current exchange rate between Euro and YEN is 0.02.

Suppose the current exchange rate between Euro and YEN is 0.02. The euro-denominated annual continuously compounded risk-free rate is 4% and the yen-dominated annual continuously compounded risk- free rate is 1%. What are the 6-month euro/yen and yen/euro forward prices?

1. Suppose the exchange rate between US$ and Euro, US$ and Japanese Yen are: 1...

1. Suppose the exchange rate between US$ and Euro, US$ and Japanese Yen are: 1 US$ = 2 Euro; 1 US$ = 100 Yen. Suppose the interest rates published by central banks in the U.S., Euro zone, and Japan are 2%, 3%, and 4%, respectively; And, suppose the inflation rates in the U.S., Eurozone, and Japan are 1%, 2%, and 1%, respectively. Therefore, (calculation formula is optional) Q1.1: How much Yen can 1 Euro exchange for?...

Rate Symbol $1 USD 0.87 Euro $1 USD 0.76 Pound $1 USD 109.5 Yen $1 USD...

Rate Symbol $1 USD 0.87 Euro $1 USD 0.76 Pound $1 USD 109.5 Yen $1 USD 6.75 Yuan $1 USD 16.75 Pesos (MX) $1 USD 66.02 Rubles $1 USD 3.65 Real They are all in their currency in billions and I need to make them into US dollar. Like Yen is 84.5 billion yen and also 14.2 billion yen, what are they if their converted to US dollars. Do that for all in the table below. Please show formula Yen...

The Euro -Yen dollar spot rate is £$0.89/¥$. When the45-day forward exchange rate is £$0.90/¥$...

The Euro -Yen dollar spot rate is £$0.89/¥$. When the 45-day forward exchange rate is £$0.90/¥$ then the Euro forward dollar is selling at discount or premium of _________%

Suppose that the exchange rate (spot price) of Euro in GBP (British Pound) is GBP 0.95. ...

Suppose that the exchange rate (spot price) of Euro in GBP (British Pound) is GBP 0.95. In addition, assume that you can freely borrow and lend in GBP for any maturity at a rate of 2% per annum and that you can do the same in Euro at a rate of 1% per annum. Both rates are continuously compounded rates. Given these assumptions: Compute the forward price (exchange rate) of the GBP in Euro for delivery of the GBP in...

The euro exchange rate is $1.25/euro

The euro exchange rate is $1.25/euro. The continuously compounded dollar interest rate it 5% and the continuously compounded euro in- terest rate is 4%. Suppose that you borrow euros and lend dollars for 1 year. At what exchange rate will you break even on this position?

Suppose the $/€ exchange rate is $1.1874 = €1.0, the Yen/€ exchange rate is 127.73 (1...

Suppose the $/€ exchange rate is $1.1874 = €1.0, the Yen/€ exchange rate is 127.73 (1 € will purchase 121.73 yen), and the US $ will purchase 105.68 yen. In this scenario arbitrage is possible. What is the potential profit per $1,000,000 US if one conducts triangular arbitrage? show your work in excel

Suppose the exchange rate was $1 = 120 yen in 2007 and $1 = 100 yen in 2008.

Suppose the exchange rate was $1 = 120 yen in 2007 and $1 = 100 yen in 2008. If an electronic component made in Japan cost 12,000 yen in 2007, its dollar price is ______________ in 2007. Its dollar price will be _______ in 2008. This is called a/an ____________ of the dollar.Select one:a. $100 in 2007; $125 in 2008; depreciationb. $100 in 2007; $125 in 2008; appreciationc. $100 in 2007; $120 in 2008; depreciationd. $50 in 2007; $25 in...

Question 4: Suppose the current exchange rate for the Japanese Yen against the dollar is $1...

Question 4: Suppose the current exchange rate for the Japanese Yen against the dollar is $1 = 120 yen. Answer the following questions using the long run model of the exchange rate developed in class. a. If you expect Japanese monetary growth to be a total of 25% larger than the US monetary growth rate over the next ten years, what is your best guess as to the exchange rate ten years from now? Be as precise as possible....

Question