Answer :
Final answer:
The cross-rate in terms of yen per pound is ¥91.34. The arbitrage profit per dollar used is ¥64.57.
Explanation:
To calculate the cross-rate in terms of yen per pound, we divide the yen exchange rate by the pound exchange rate:
Cross-rate (yen per pound) = Yen exchange rate / Pound exchange rate
Given:
- Yen exchange rate = ¥116 = $1
- Pound exchange rate = £1 = $1.27
Substituting the values:
Cross-rate (yen per pound) = ¥116 / £1.27
To calculate the arbitrage profit per dollar used, we compare the given cross-rate with the calculated cross-rate:
Arbitrage profit per dollar used = Given cross-rate - Calculated cross-rate
Given:
- Given cross-rate = ¥156 = £1
- Calculated cross-rate = ¥116 / £1.27
Substituting the values:
Arbitrage profit per dollar used = ¥156 - (¥116 / £1.27)
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