Suppose $1.69 = 1 in New York and $1.71 = 1 in London. How can foreign-exchange arbitragers


Suppose $1.69 = £1 in New York and $1.71 = £1 in London. How can foreign-exchange arbitragers profit from these exchange rates? Explain how foreign-exchange arbitrage results in the same dollar/pound exchange rate in New York and London.

Exchange Rate
The value of one currency for the purpose of conversion to another. Exchange Rate means on any day, for purposes of determining the Dollar Equivalent of any currency other than Dollars, the rate at which such currency may be exchanged into Dollars...
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International economics

ISBN: 978-8131518823

13th Edition

Authors: Robert J. Carbaugh

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