Wednesday
April 23, 2014

Homework Help: Economcis

Posted by Wilde on Friday, May 23, 2008 at 12:16pm.

I need some help on the following question, thanks.

e = euros

Suppose quotes for the dollar-euro exchange rate, E$/e, are as follows: in New York $1.50 per euro, and in
Tokyo $1.55 per euro. Describe how investors use arbitrage to take advantage of the difference in exchange
rates. Explain how this process will affect the dollar price of the euro in New York and Tokyo.

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