This preview shows page 1. Sign up to view the full content.
Unformatted text preview: The (indirect) New York rate is 1/.004700 = 212.7660 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 x 216.6752 = 2,166,752 Y. Sell the Yen in New York at the prevailing rate. 2,166,752 x .004700 = $10,183.73 Your net gain is $10,183.73 - $10,000 = $183.73 i. (Canadian dollar/Yen) = ($/Yen) = .004700 (1/.8450) = .00556...
View Full Document
- Winter '11