QUESTION 4 Given the following exchange rates in the market, what should be the cross...

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Accounting

QUESTION 4

Given the following exchange rates in the market, what should be the cross exchange rate between Japanese yen and Euro?

Japanese yen: 105 JPY/USD

Euro: 1.13 USD/EUR

	A.	118.65 EUR/JPY.
	B.	92.92 JPY/EUR.
	C.	92.92 EUR/JPY.
	D.	118.65 JPY/EUR.

QUESTION 7

You entered a short sell position and sold 1,000,000 EUR at 1.07 USD/EUR yesterday. Today the EUR exchange rate turned out to be 1.09 USD/EUR. How much money did you make or lose in the short sell position? (assume zero interest cost in short selling EUR)

	A.	20,000 USD gain.
	B.	20,000 USD loss.
	C.	20,000 EUR gain.
	D.	20,000 EUR loss.

QUESTION 8

You find the following exchange rates in the market:

Bid Price Ask Price

Bank of China 6.42 CNY/USD 6.45 CNY/USD

HSBC Bank 6.46 CNY/USD 6.52 CNY/USD

If you have $1,000,000 USD, can you make any arbitrage profit by trading with the two banks?

	A.	Yes. I can make $10853 arbitrage profit.
	B.	Yes. I can make $15576 arbitrage profit.
	C.	No arbitrage profit.
	D.	Yes. I can make $1550 arbitrage profit.

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