# mini case - The(indirect New York rate is 1.004700 =...

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e. (1)15,000 (Canadian \$) x . 8450 (U.S. \$/Canadian \$) = \$12,675 (2)1,500,000 (Yen) x .004700 (\$/Yen) = \$ 7,050 (3)55,000 (Swiss-franc) x .5150 (\$/Swiss franc) = \$28,325. f. (1)20,000 (\$) x 1/.004700 (Yen/\$) = 4,255,319.15 Yen (2)5,000 (\$) x 1/.5150 (Swiss franc/\$) = 9,708.74 Swiss franc (3) 15,000 (\$) x 1/.8450 (Canadian \$/U.S. \$) = 17,751.48 Canadian \$. g. Recall that the indirect quote = (1/Direct Quote). The results are tabulated below: Foreign Currency / \$ Canadian - dollar Spot 1.1834 30 day 1.1884 90 day 1.1919 h. The Tokyo rate is 216.6752 Yen/\$.
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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...
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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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