Suppose $1 = 120 yen in New York, $1 = 2 euros in Paris, and 1 euro = 75 yen in Tokyo. A speculator with $1 million would get a profit of ______ by engaging in a 3-point arbitrage. a. $1.20 b. 150,000 yen c. $1.25 million d. $250,000
Suppose $1 = 120 yen in New York, $1 = 2 euros in Paris, and 1 euro = 75 yen in Tokyo. A speculator with $1 million would get a profit of ______ by engaging in a 3-point arbitrage. a. $1.20 b. 150,000 yen c. $1.25 million d. $250,000
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 33QA
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Q1-15
Suppose $1 = 120 yen in New York, $1 = 2 euros in Paris, and 1 euro = 75 yen in Tokyo. A speculator with $1 million would get a profit of ______ by engaging in a 3-point arbitrage.
a. $1.20
b. 150,000 yen
c. $1.25 million
d. $250,000
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