This information is for Question 1 to 3

Assume that there is no transaction cost and you observe the following quotation

1. GBP1: USD 1.78
2. JPY1: USD 0.0080
3. JPY1: GBP 0.0055

From Quote 1 and 2, what is the cross rate for GBP/JPY.

Use 4 number after decimal place

This information is for Question 1 to 3

Assume that there is no transaction cost and you observe the following quotation

1. GBP1: USD 1.78
2. JPY1: USD 0.0080
3. JPY1: GBP 0.0055

From Quote 1 and 2, what is the cross rate for GBP/JPY.

Use 4 number after decimal place

Question at position 2

2

Question at position 2

Based on the cross rate found above, at quotation 3 which currency you want to buy/sell:

1. sell GBP and buy JPY
2. Buy GBP and sell USD
3. sell JPY and buy GBP
4. There is no arbitrage opportunity, so it does not matter which currency you buy or sell

Based on the cross rate found above, at quotation 3 which currency you want to buy/sell:

1. sell GBP and buy JPY
2. Buy GBP and sell USD
3. sell JPY and buy GBP
4. There is no arbitrage opportunity, so it does not matter which currency you buy or sell

Question at position 3

3

Question at position 3

If you have USD100,000 and you try triangular arbitrage, which is the correct way of trade:

1. USD --> GBP --> JPY
2. USD --> GBP --> JPY --> USD
3. USD --> JPY --> USD --> GBP --> USD
4. USD --> JPY --> GBP
5. USD --> JPY --> GBP --> USD

If you have USD100,000 and you try triangular arbitrage, which is the correct way of trade:

1. USD --> GBP --> JPY
2. USD --> GBP --> JPY --> USD
3. USD --> JPY --> USD --> GBP --> USD
4. USD --> JPY --> GBP
5. USD --> JPY --> GBP --> USD

Question at position 4

What is the rate of return for one round of arbitrage?