Q:
You observe the following exchange rates in the following markets: New York: 120yen/$, Tokyo: 57yen/DM and Frankfurt: 2.013DM/$. If a trader was to exploit the mispricing that existed, what would be his or her riskless profit in U.S. dollar terms if he or she could borrow $1,000,000?
A) $45,834
B) $73,842
C) $37,562
D) $52,291
A:

The correct answer is: a)


RELATED FAQS

  1. Committing acts against the Commodity Exchange Act can result in fines up to ... ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  2. KLM Corporation shares just paid a dividend of $1.34. Earnings are expected to grow ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  3. A customer has a short margin account. The account has equity of $15,000 ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  4. A “normal market” is also called a (an): A) Inverted market b) Carrying charge market ...

    Free info on financial certification exams including study guides, exam questions, and much more!
  5. I gave an answer on the test from my study guide that was scored wrong on the Series ...

    Learn more about potential causes of differences between the Series 63 exam and study guide questions. Find out how new questions ...
  6. A 10-year, 8% coupon bond is currently trading at 98.5 of par ...

    Free info on financial certification exams including study guides, exam questions, and much more!
RELATED TERMS
  1. Series 66

    An exam administered by the Financial Industry Regulatory Authority ...
  2. Series 24

    A securities license entitling the holder to supervise and manage ...
  3. Series 86/87

    An exam administered by the Financial Industry Regulatory Authority ...
  4. Series 65

    A securities license required by most U.S. states for individuals ...
  5. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  6. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
Hot Definitions
  1. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  2. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  3. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  4. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  5. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  6. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
Trading Center