A German firm is trying to determine the euro/pound rate and has the following exchange rate information:

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–USD/pound = 1,5509$/£

–USD/euro = 1.2194$/€

•What should be the euro/pound cross rate without arbitrage?

• If the spot euro/pound rate is 1.30, explain how you can earn from it.

Related Book For answer-question

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

ISBN: 978-1337614689

9th edition

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

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Posted Date: Jul 18, 2023 07:28 AM

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A German firm is trying to determine the euro/pound rate and has the following exchange rate information:

Question:

Expert Answer:

To determine the europound cross rate without arbitrage we can use the information provided 1 USDpound 15509 2 USDeuro 12194 To find the europound cro... View the full answer

Financial Reporting Financial Statement Analysis and Valuation a strategic perspective

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