Toyko New York Arbitrage

Toyko New York Arbitrage - $10,000 * 216.6752 = 2,166,752...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
The Tokyo rate is 216.6752 Yen/$ The (indirect) New York rate is 1 ÷ 0.004684 = 213.4972 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
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: $10,000 * 216.6752 = 2,166,752 Y. Sell the Yen in New York at the prevailing rate. 2,166,752 Y * 0.004684 = $10,149.07 Your net gain is $10,149.07 - $10,000.00 = $149.07...
View Full Document

Ask a homework question - tutors are online