Use the following information to answer questions 24-25.
Assume that the following exchange rates exist for the U.S. dollar, Japanese Yen and the British Pound.

-If you are an arbitrageur that starts with $1,000 in New York,

Question

Use the following information to answer questions 24-25.
Assume that the following exchange rates exist for the U.S. dollar, Japanese Yen and the British Pound.
 
-If you are an arbitrageur that starts with $1,000 in New York,

Quizplus · Accepted Answer

The yen is cheaper in New York ($0.0097 per JPY) compared to London ($0.0099 per JPY), so an arbitrageur can buy yen in New York, and then sell them in London for a profit. The pound is more expensive in New York ($1.36 per GBP) compared to London ($1.33 per GBP), so buying pounds in New York and selling them in London would result in a loss. There is no need to spread the risk by buying both currencies, as there is an arbitrage opportunity in the yen alone.

Use the Following Information to Answer Questions 24-25