(Table 1: Exchange Rates) Table 1, Exchange Rates, provides three exchange rates for currencies of three countries. Use these rates to determine what would happen if someone attempted arbitrage with $100. $\begin{array}{|c|}
\hline\text { Table 1: Exchange Rates } \
\hline 1 \text { euro }=110 \text { yen } \quad \mid \$ 1=94 \text { yen } \quad \mid \$ 1=.86 \text { euro }\
\hline
\end{array}$

Question

Quizplus · Accepted Answer

Given the exchange rates, converting $100 to euros gives $100 * 0.86 = 86 euros. Converting 86 euros to yen gives 86 * 110 = 9460 yen. Finally, converting 9460 yen back to dollars gives 9460 / 94 = $100.64. The gain is thus 64 cents, which is less than $1.

(Table 1: Exchange Rates) Table 1, Exchange Rates, Provides Three