At a currency market, I can make the following exchanges:
- 1 US Dollar for 120 Japanese Yen
-140 Japanese Yen for 1 British Pound
-3 British Pound for 250 Indian Rupees
Suppose at the same currency market, I can exchange 2 US Dollars for
150 Indian Rupees. Describe how you can make a million dollars.
“Fair” value: 14 US Dollars = 1000 Indian Rupees
Actual value: 14 US Dollars = 1050 Indian Rupees
1 dollar = 120 yen * 1 pound/140 yen * 250 rupees/3 pound = 71.43 rupees
the fair value is 1 dollar = 75 rupees
So, you make 3.57 rupees/dollar profit
That is a 5% profit.
So, how much do you have to spend on rupees to make a profit of $1M?