3 Suppose a bank customer with 1,000,000 wishes to trade out of euro and into Japanese

yen. The dollar-euro exchange rate is quoted as $1.60 = 1.00 and the dollar-yen

exchange rate is quoted at $1.00 = 120. How many yen will the customer get?

4. Suppose you observe the following exchange rates: $1= 0.85 ; 1 = $3.00; and 2.00 =

1.00. Starting with $1,000,000, how can you make money?

5. You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate

is quoted as $1.20 = 1.00 and the dollar-pound exchange rate is quoted at $1.80 = 1.00.

If a bank quotes you a cross rate of 1.00 = 1.50 how much money can an astute trader

make?

6. You are a U.S. based treasurer with $1,000,000 to invest. The dollar-euro exchange rate

is quoted as $1.60 = 1.00 and the dollar-pound exchange rate is quoted at $2.00 = 1.00.

If a bank quotes you a cross rate of 1.00 = 1.20 how much money can an astute trader

make?

7. The Singapore dollar/U.S. dollar (S$/$) spot exchange rate is S$1.60/$, the Canadian

dollar/U.S. dollar (CD/$) spot rate is CD1.33/$ and the S$/CD1.15. Determine the

triangular arbitrage profit that is possible if you have $1,000,000.