You are the trade advisor to a multinational company with an investment of US1,500,000. The following are the rates quoted on the FOREX market. US $ to Euro 1.22/€ US$ to pounds 1.84/£ Euros to pounds 1.54/£ Calculate the cross rate and determine if a profit opportunity exists. What is the value of that profit if you decide to trade with the US$1.5 million?
You are the trade advisor to a multinational company with an investment of US1,500,000. The following are the rates quoted on the FOREX market. US $ to Euro 1.22/€ US$ to pounds 1.84/£ Euros to pounds 1.54/£ Calculate the cross rate and determine if a profit opportunity exists. What is the value of that profit if you decide to trade with the US$1.5 million?
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 2BIC
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You are the trade advisor to a multinational company with an investment of US1,500,000. The following are the rates quoted on the FOREX market.
US $ to Euro |
1.22/€ |
US$ to pounds |
1.84/£ |
Euros to pounds |
1.54/£ |
Calculate the cross rate and determine if a profit opportunity exists. What is the value of that profit if you decide to trade with the US$1.5 million?
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