Determine the sfr per gbp exchange rate consistent

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FINANCIAL MARKETS COURSE QUESTION

Question 1. Suppose the Swiss Franc is currently traded at SFR 1.40/$. The British Pound is traded at GBP 1.39/$. Ignoring transaction costs:

a. Determine the SFR/GBP exchange rate consistent with these direct quotations.

b. Suppose the SFR/GBP cross rate in the market was at SFR 1.05/GBP. Is there any arbitrage opportunity?

Reference no: EM132511889

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