The U.S. dollar spot exchange rate with the Canadian dollar is $1 = CA$1.12. The U.S. dollar and Swiss franc exchange rate is $1 =1.275. If the cross-rate between the franc and Canadian dollar is 1 franc = CA$0.9750, which of the following statements is correct?
A) Starting with U.S. dollars, buy Swiss francs and convert them to Canadian dollars, and then convert back to U.S. dollars.
B) Starting with Canadian dollars, buy Swiss francs and convert them to U.S. dollars, and then convert back to Swiss francs.
C) Starting with Swiss francs, buy Canadian dollars and convert them to Swiss francs, and then convert back to U.S. dollars.
D) Starting with Canadian dollars, buy U.S. dollars and convert them to Swiss francs, and then convert back to U.S. dollars.
Correct Answer:
Verified
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