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Assume you observe the following spot exchange rates: EUR0.9/USD, CHF1.2/USD, CHF1.4/EUR. Which of the following statements is MOST correct? a. Assuming the CHF exchange rates

Assume you observe the following spot exchange rates: EUR0.9/USD, CHF1.2/USD, CHF1.4/EUR. Which of the following statements is MOST correct?

Assuming the CHF exchange rates to remain constant, the EUR/USD rate has to change to .80 to restore equilibrium.

These rates are in equilibrium and there are no arbitrage opportunities.

Assuming the USD exchange rates to remain constant, the CHF/EUR rate has to change to 1.33 to restore market equilibrium.

Assuming the EUR exchange rates to remain constant, the CHF/USD rate has to change to 1.24 to restore equilibrium.

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