Question

**Question 10**

A currency trader sees the following exchange rates.

1 USD = 1.355 CAD

1 USD = 0.935 EUR

1 EUR = 1.442 CAD

Is the CAD per EUR exchange rate in equilibrium?
**Calculations required. Briefly explain.** Show your
work. Use 3 decimals.

**Question 11**

Refer to information provided above (question 10). If the
Treasurer invests 15 million USD, show whether or not it would be
possible to profit from arbitrage?
**Calculations****required**. Show your
work. Use 3 decimals.

Answer #1

Three Exchange Rates are as follows: 1) US Dollars (USD) to
Canadian Dollars (CAD) at CAD 1 to USD 1.05 2) CAD to Euros (EUR)
at CAD 1.41 to EUR 1 3) EUR to USD at EUR 0.72 to USD 1 Suppose you
start with USD 100,000, and do one round of "triangular arbitrage",
that is convert make a total of 3 foreign exchange transactions to
start from USD and return to USD. What will be your profit in
USD?

Take the following two exchange rates and compute the EUR/INR
cross exchange rate. INR12.1225/USD and EUR.8145/USD.
In the question above, if there is a direct cross exchange rate
of EUR.066215/INR, is there a triangular arbitrage opportunity? If
yes, start with $50,000 and indicate how much triangular arbitrage
profit exists for 1 trip around the triangle. Show your work

EXCHANGE RATES :
EUR/USD
GBP/EUR
USD/JPY
GBP/USD
USD/CHF
USD/CAD
EUR/JPY
AUD/USD
1.18
1.11
106.33
1.31
0.92
1.31
125.58
0.73
YOU ARE REQUIRED TO COMPUTE THE FOLLOWING
QUOTATIONS. PLEASE PROVIDE YOUR CALCULATION AND
RESULT
Exchange Rates Details of Your Computation
GBP/USD ?
EUR/JPY ?
USD/EUR ?
CAD/CHF ?
JPY/USD ?
EUR/AUD ?
AUD/EUR ?
AUD/JPY ?
AUD/CAD ?
USD/JPY ?
TOTAL ?

The following table contains information on spot and forward
exchange rates among U.S. dollar (USD), Malaysian ringgit (MYR),
Japanese yen (JPY) and Canadian dollar (CAD).
Currencies
3-month forward rate
Spot rate
USD/MYR
4.3936
4.3610
USD/JPY
107.3333
107.6400
USD/CAD
1.3856
1.3839
The following table contains information on the 3-month nominal
risk-free rate per annum for the four different currencies
3-month nominal risk-free rate
MYR
USD
CAD
JPY
4.00%
1.00%
1.50%
0.00%
Note that the Japanese yen 3-month nominal risk-free rate is...

A. Take the following two exchange rates and compute the EUR/INR
cross exchange rate. INR12.1225/USD and EUR.8145/USD.
B. In question A, if there is a direct cross exchange rate of
EUR.066215/INR, is there a triangular arbitrage opportunity? If
yes, start with $50,000 and indicate how much triangular arbitrage
profit exists for 1 trip around the triangle.

Suppose the following prevailed in the foreign currency market:
$/€ (USD/EUR) spot: 1.800 $/€ (USD/EUR 90 day forward: 1.0810 $
(USD) interest rates 0.0075 (75 basis points or three fourths of
one percent) € (EUR) interest rates 0.0010 (10 basis points or one
tenth of one percent ) Use these data to answer the following three
questions.
Question 12 (1 point) What is the forward premium/discount of
the € (EUR)?
Question 13 (1 point) What is the USD - EUR...

You can buy and sell currency at the following exchange
rates:
USD 0.047MXN,MXN
17.25CAD,USD 0.79CAD
1A. Is there an arbitrage in these exchange rates? Please
provide evidence for your answer.
1B. If you start out with USD 100,000, what trades would you
make to take advantage of any arbitrage you find? How many USD
would you end up with?

Use the following information to answer this question.
The Indian rupee to US dollar exchange rate is quoted at Bank A as
INR 74 =1 USD. The Canadian dollar (CAD) to US dollar exchange rate
is quoted at Bank B as CAD 1.3 = 1 USD. You learn that Bank C is
making a direct market between the Indian rupee and the Canadian
dollar INR/CAD quote of 56 INR = 1 CAD.
How much profit can an astute trader with...

****Can someone show me how to get the answers?
1. Suppose:
(Canada) CAD 1 = USD 0.92
USD 1 = GBP 0.63 (UK)
What's the cross exchange rate between CAD and GBP?
Answer: GBP 1 = CAD 1.73
2. Suppose:
EUR 1 = USD 1.46
USD 1 = AUD 1.15 (Australia)
What's the cross exchange rate between EUR and AUD?
Answer: AUD 1 = EUR 0.60
3. The rate is AUD1.83/GBP. Charlotte earned GBP 100 for dog
walking. The new...

Japanese Yen to Canadian Dollar 78.87 JPY/CAD
United States Dollar to Euro 1.16 USD/EUR
Swiss Franc to Canadian Dollar 0.69 CHF/CAD
Swiss Franc to Euro 1.08 CHF/EUR.
Determine the implied USD/JPY cross rate. (2 POINTS)
Suppose that the JPY to USD exchange rate is 111 JPY/1 USD. Is
there any arbitrage opportunity? Explain in words why you think
that is the case. (2 POINTS)
Assume you have 520 JPY. What is your profit in JPY, (show your
calculations)? (2 POINTS)

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