QUESTION 8 2 points Suppose the Japanese yen exchange rate O a 532.17 Ob $26.84

Question

QUESTION 8 2 points Suppose the Japanese yen exchange rate O a 532.17 Ob $26.84 ( e. S45.91 d.S 18.43 ¥104 $1, and the British pound exchange rate is fl $1 69 The cross-ate s ¥179 f1 What is your arbitrage profit if you hadS1 0007 QUESTION 9 3 points Save Ar Suppose your company imports computer motherboards from Singapore. You have just placed an order for 30,000 motherboards at a cost to you of 229.50 Singapore dollars (SND) each. The spot exchange rate is SND1.2528 per S1. You will pay for the You can sell the motherboards for $195 each If the exchange rate goes up by 10% over the next 90 days, what will the change in your profit? shipment when i arr ves in 90 days a.-51 53,918.50 O b.5354,310.34 c-5256321 84 O d S499,608.16

Explanation / Answer

1
convert 1000 dollars to pounds=1000/1.69=591.715976 pounds
convert pounds to yen=591.715976*179=105917.16 yen
convert 105917.16 yen again to dollars=105917.16/104=1018.434 dollars
hence, arbitrage profit of 1018.434-1000=18.434 dollars

2
Profit=30000*(-229.5+195*1.2528) SND=+443880 SND=+443880/1.2528=+354310 dollars

New Profit =30000*(-229.5+195*1.2528*1.1) SND=1176768 SND=1176768/(1.2528*1.1)=853918.5 dollars
So, change=853918.5-354310=499608.5 dollars

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