Assume the following exchange rates Value of Canadian Dollar in U.S dollars $.92 value of New Zealand dollar in U.S dollars $.32 Value of Canadian dollar in New Zealand dollars NZ $3.00 Given this information, starting with U.S dollar, you and others can perform triangular arbitrage by________. a. Using U.S dollar to buy New Zealand dollar at $.32. b. Using U.S dollar to buy Canadian dollar at $.92 c. Using New Zealand dollar to buy Canadian dollar at NZ$3.00 d. Using U.S dollar to buy Canadian dollar at NZ$3.00
Assume the following exchange rates Value of Canadian Dollar in U.S dollars $.92 value of New Zealand dollar in U.S dollars $.32 Value of Canadian dollar in New Zealand dollars NZ $3.00 Given this information, starting with U.S dollar, you and others can perform triangular arbitrage by________. a. Using U.S dollar to buy New Zealand dollar at $.32. b. Using U.S dollar to buy Canadian dollar at $.92 c. Using New Zealand dollar to buy Canadian dollar at NZ$3.00 d. Using U.S dollar to buy Canadian dollar at NZ$3.00
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Assume the following exchange rates
Value of Canadian Dollar in U.S dollars $.92
value of New Zealand dollar in U.S dollars $.32
Value of Canadian dollar in New Zealand dollars NZ $3.00
Given this information, starting with U.S dollar, you and others can perform triangular arbitrage by________.
a. Using U.S dollar to buy New Zealand dollar at $.32.
b. Using U.S dollar to buy Canadian dollar at $.92
c. Using New Zealand dollar to buy Canadian dollar at NZ$3.00
d. Using U.S dollar to buy Canadian dollar at NZ$3.00
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