Question

4. all the exchange rate combinations between a set of countries. The columns list the exchange rate in terms of home country currency per foreign currency, where the column heading is the home country foreign currency units per home currency, where the row heading is the home country. For example, E/B is the amount of currency A needed to buy one unit of currency of matrix where there are three countries, A, B and C, would look are often summarized in a matrix that lists Exchange rates The rows list the exchange rate in terms of An exchange rate В. as follows: Country A В EA/A Ев/А Ec/A Eл/B В Ев/в Ec/B EA/C EB/c Ec/c

Answer 1

Solution: country A B A EHA enie EBIA Eglo B ECIA Ecle Ecle c . EAIC EBlc Exchange rate for country cis : country B A B C A EBLA OY . CAIB EBLB 0.8 į. EAIC EBIC I B • since there is no ask-bid provided here we can simply divide / and find the below, Triangulas arbitrage ensures that no cross arrency profit is made we have:

Ecla) = o.8 So converting Ecalc) = 110.8 = 1.25 1 now clb = 0.5 goble=2) alc * CA = 2. Co.8 = 1. G Cel) - ~~ ). 6 . So Ale = 0.62 S - - Country 이 이 | : 8 - 0 Gas | 15 , : - -