PPP, IRP, Foreign Exchange Problem Set
PPP, IRP, Foreign Exchange Problem Set
Now, ignore the bid ask spread and assume that we can either buy or sell at one price. Also, suppose we are quoted to following exchange rates:
Frankfurt £/SF = 0.2
New York $/SF = 0.40
London $/£ = 1.90
How can astute trades profit from the distorted exchange rates? How much money would you make if you started with $1,900,000?
7 years ago
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