In a free floating exchange rate regime, the demand and supply for a currency determine its price.
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Question:
In a free floating exchange rate regime, the demand and supply for a currency determine its price.
b) Calculate the GBP/DKK cross rate using the following quotes. Show all calculations.
USD/DKK 7.1931-37
USD/GBP 0.8463-69
c) What arbitrage strategy can be used if the following rates are observed in the market and what will be the risk free profit amount? Show all calculations.
USD1 = AUD1.5540
USD1 = SGD1.5530
AUD1 = SGD 1.1610
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