Computation of cross currency exchange ratesyesterday you

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Reference no: EM13356588

Computation of cross currency exchange rates.

Yesterday you picked up the Wall Street Journal and saw the following spot currency quotes:

                               in U.S. $                 per U.S. $

      Japan (Yen)      .010124                   98.775

      U.K. (Pound)    1.4036                     ________

Required:

a. Fill in the missing number (remember to show your work!).

b. What is the appropriate spot cross rate between the yen and the pound (£ or GBP)?

c. The Piggy Bank is currently quoting a spot rate of 140.00 yen per pound. Show how a British banker could use geographic arbitrage to profit from this bank's quote. What is the arbitrage profit per British Pound?

Reference no: EM13356588

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