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quiz_2_va_solutions[1]

# quiz_2_va_solutions[1] - Version A Fin 536 Quiz 2 Solutions...

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Version A Fin 536 Quiz 2 Solutions Name_____________________Section_4pm/7pm 1. (5pts)Fill out the answers. a. Two banks quotes the following rates at the same time: Citibank NY quotes ¥105.20- 105.34/€ and Barclays London quotes ¥ 107.35-107 .56/€ . The ask prices of € from Citibank is ___ ¥105.34/€ _ ___ and the ask price of ¥ from Barclays is __¥107.35 ___. We can profit from buying __ euro ___(euro/yen) from Citibank and sell the ____euro ___(euro/yen) to Barclays. The profit will be ¥____2.01_ ___ per euro. b. Three banks are quoting the following rates: Citibank quotes ¥85/\$; UBS quotes \$1.29 /€; Deutsche Bank quotes ¥1 12 /€. If you start with \$1000, your profit will be \$___21.43_ _______from the triangular arbitrage. c. The exchange rate between Mexican peso and U.S. dollar was peso 8.5/\$ in Jan 2009 and peos10/\$ in Jan 2010, then Mexican peso has __ depreciated ___ (appreciated/depreciated) against peso by _____15_ ___% during the year. d. A Big Mac costs ¥290 in Japan, while it costs \$3.5 in the U.S. The implied PPP exchange rate between yen and dollar is ¥____82.86 _____/\$. If the actual market

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