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Scrat [10]
4 years ago
12

Suppose:

Business
1 answer:
dolphi86 [110]4 years ago
8 0

Answer:

C) Yes, because the direct rates differ in all markets

Explanation:

₤1 buys €1.50 in NY, Tokyo, and London -> ₤1 = €1.50  

₤1 buys ¥150 in NY, Tokyo, and London -> ₤1 = ¥150

⇔ €1.50 = ¥150

⇔ ¥100 = €1.50/1,5 = €1

$1 buys ¥100 in NY, Tokyo, and London  - > $1 =  ¥100

Tt clearly that €1 is different with $1.0 (as Reuter quoted today, $1.00 = €0.9030), so there’re opportunity for two-point arbitrage .

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Answer:

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(B) I and III

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