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The london currency markets

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6. In the london currency markets, the following quotes are available: EURUSD = 1.50 and EURCAD =1.6. in the new york currency markets, we find the CAD trading at CADUSD = 0.9. Explain how an arbitrager can exploit this situation. if the arbitrager can employe USD 1000 (or its equivalent in another currency) toward this strategy, how much would the arbitrager end with?

8.  Interest rates on one-year instruments denominated in JPY and USD are 1 percent and 5 percent, respectively.  The JPY is currently trading at a rate of USDJPY = 100.  The one-year forward rate is USDJPY = 98.  Explain how an arbitrager can exploit this situation.  What is the net profit for USD 1000 (or its equivalent in another currency) committed to this strategy?

15.  The United Kingdom and Chinese interest rates are 5 percent and 10 percent, respectively. If the rate of inflation in the United Kingdom is 3 percent, use the IFE to determine the inflation in China.

Reference no: EM13986460

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