Suppose the Japanese yen exchange rate is ¥85 = $1, and the British pound exchan

Question

Suppose the Japanese yen exchange rate is ¥85 = $1, and the British pound exchange rate is £1 = $1.53.

What is the cross-rate in terms of yen per pound? (Round your answer to 2 decimal places, e.g., 32.16.)

Suppose the cross-rate is ¥133 = £1. What is the arbitrage profit per dollar used? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

Arbitrage profit = 133-130.05 = 2.95 yen per Pound

part B is wrong aparently wrong

tell me what am i doing wrong

Suppose the Japanese yen exchange rate is ¥85 = $1, and the British pound exchange rate is £1 = $1.53.

Explanation / Answer

Answer:b $1 = ¥85

¥85 (£1/¥133) = £0.639097

£0.639097 ($1.53/£1) = $0.9778195

Loss = $0.9778195 - $1 = -$0.02218

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