How much profit could you make from trading

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Reference no: EM132007266

Suppose you have the following spot exchange rates:

$1=¥106, €1=1.15, and €1=¥124.

Please check if the cross rate between the Japanese yen and the euro is consistent or not.

How much profit (in $terms) could you make from trading $1 million?

Describe your trading process to get your profit. How do you expect the current cross rate of €1 = ¥124 change after numerous arbitrage transactions in global FX markets take place - go up or down? Explain why and how.

Reference no: EM132007266

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