CHAPTER 17 - 17-1 A) 10,000(CANADIAN $) * .8437(US....

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Unformatted text preview: 17-1 A) 10,000(CANADIAN $) * .8437(US. $/CANADIAN $)= $8,437 B) 2,000,000 (YEN) * .004684 ($/YEN) = $9,368 C) 50,000 (SWISS FRANC) * .5139 ($/SWISS FRANC) =$25,695 17-2 (A) 10,000 (4 * 1/0.004684(YEN/$) =2,134,27.4 Y (B) 15,000 ($) *1/.5139 (SWISS FRANC/$)=29,188.56 SWISS FRANC (C) 20,000 ($) * 1/.8437 (CANADIAN $/U.S. $) = 23,705.11 CANADIAN $ 17-5 TOKYO RATE IS 216.6743 YEN/$ THE (INDIRECT ) NEW YORK RATE IS 1/0.004684 = 213.4927 YEN/$ ASSUMING NO TRANSACTION COSTS, THE RATE BETWEEN TOKYO AND NEW YORK ARE OUT OF LINE. ARBITRAGE PROFITS ARE POSSIBLE. YEN IS CHEAPER IN TOKYO. BUY YEN FOR $10,000 $10,000*216.6743=2,166,743 Y SELL THE YEN IN NEW YORK AT THE PREVAILING RATE 2,166,743*0.004684= $10,149.02 YOUR NET GAIN IS $10,149.02-$10,000= $149.02 ...
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This note was uploaded on 08/22/2011 for the course ACCOUNTING 201 taught by Professor Stevejoseph during the Winter '11 term at Aarhus Universitet.

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