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Note that this paper uses the standard notation for exchange rates, for example EURUSD 1.1 means "$1.1 for 1 euro"
1. a. Calculate to 4 decimal places the new exchange rate after a 2% increase in the value of the dollar given a current exchange rate of
EURUSD 1.1
b. Given the following exchange rates calculate the GBPEUR rate to 4 decimal places.
EURUSD 1.1043
GBPUSD 1.2970
c. Explain the relationship between your answer to part b of this question and triangular arbitrage.
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