Question
1. Given the following exchange rates, how will arbitrageurs behave? Calculate the rate of profit. a. 1 = $1.05 in New York 1 = $1.06
1. Given the following exchange rates, how will arbitrageurs behave? Calculate the rate of profit.
a. 1 = $1.05 in New York 1 = $1.06 in Paris What will happen to the Euro in the two markets? Depreciate or appreciate? (10 points)
b. 1 = $1.35 in Paris 1 = $1.60 in New York 1.10 = 1.00 in London How will arbitrageurs behave? What is the rate of profit or loss? (15 points)
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International Economics
Authors: Dennis Appleyard, Alfred Field
8th Edition
978-0078021671, 0078021677
