Complete the following cross-rate table:   USD YEN EURO POUND MEXICAN PESO USD       1.5625   YEN           EURO       1.3450   POUND           MEXICAN PESO 15 0.0900         b. An astute American investor observes a bank in Japan in which it takes 260 Yens t

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
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a. Complete the following cross-rate table:

  USD YEN EURO POUND MEXICAN PESO
USD       1.5625  
YEN          
EURO       1.3450  
POUND          
MEXICAN PESO 15 0.0900      

 

b. An astute American investor observes a bank in Japan in which it takes 260 Yens to buy one British pound. If the investor has $100,000 to invest, show how at that rate he would be able to make a profit using triangular exchange rate arbitrage. Show all calculations

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