Suppose the Japanese yen exchange rate is ¥68.47 = $1, and the British pound exc

Question

Suppose the Japanese yen exchange rate is ¥68.47 = $1, and the British pound exchange rate is £1 = $1.48. (Enter your answer as directed, but do not round intermediate calculations.)

What is the cross-rate in terms of yen per pound? (Do not include the yen sign (¥). Round your answer to 2 decimal places (e.g., 32.16).)

Suppose the cross-rate is ¥103 = £1. What is the arbitrage profit per dollar? (Round your answer to 4 decimal places (e.g., 32.1616).)

Suppose the Japanese yen exchange rate is ¥68.47 = $1, and the British pound exchange rate is £1 = $1.48. (Enter your answer as directed, but do not round intermediate calculations.)

Explanation / Answer

a)

$1 = 68.47 yen

1 pound = $1.48 = 1.48 * 68.47 = 101.3356 yen

Cross rate in terms of yen per pound is, 1 pound = 101.34 yen

Arbitrafe profit per pound = 103 - 101.34 = 1.66 yen

Arbitrage profit per dollar = 1.66/1.48 = 1.12 yen

(b)

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