Question: Triangular arbitrage. Assume the exchange rate E / in Tokyo is 200 and E /$ in London is 0.5. (1) Use the New York rate

Triangular arbitrage. Assume the exchange rate E/ in Tokyo is 200 and E/$ in London is 0.5.

(1) Use the New York rate as quoted in Table 1 to determine if the dollar or yen is overvalued.

(2) List the sequence of trades if you are to conduct a triangular arbitrage.

(3) Calculate the percentage of gain from this triangular arbitrage.

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