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Stanley observes the following exchange rates. USD 1 = EUR 1.100 USD 1 = GBP 0.8082 1 GBP = EUR 1.2450 Is the GBP per
Stanley observes the following exchange rates.
USD 1 = EUR 1.100
USD 1 = GBP 0.8082
1 GBP = EUR 1.2450
- Is the GBP per EUR exchange rate in equilibrium?Showyour work.(2 marks)
- If Stanley starts with USD 10,000, how much of a profit can he earn in US dollars by exchanging currencies given the above rates?Show your work.(2 marks)
- Assume the British government changed their exchange rate policy and intervened in the foreign currency market to buy or sell dollars (USD) only when the GBP/USD exchange rate fell below or climbed above a target range.What exchange rate policy is this called?(1 mark)
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Audit Sampling
Authors: Ray Whittington, Dan M Guy, D R Carmichael
5th Edition
047137590X, 9780471375906
