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What is the spot rate of the ru

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Question 1: The euro is quoted as $/€ = 1.1420-1.1425, and the Canadian dollar is quoted as C$/US$ = 1.3540-1.3545. What is the direct quotation for the euro in Canada? Explain the rationale behind the formula used. Explain your answer.

Question 2: How large would transactions costs (in percentage) have to be to make triangular arbitrage between the exchange rates S$/£ = $1.5422/£, S$/€ = $0.9251/€, and S€/£ = €1.6650/£ profitable?

Question 3: The U.S. and the country of Rueland have the same real interest rate of 3%. The expected inflation over the next year is 6 percent in the U.S. versus 21% in Rueland. Interest rate parity exists. The one-year currency futures contract on Rueland's currency (called the ru) is priced at $.40 per ru. What is the spot rate of the ru?

Reference no: EM132459402

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