Assume the Following Information What Will Be the Yield for an Investor Who Has

question 39

Multiple Choice

Assume the following information:
$$\begin{array} { l l r } \text { Exchange rate of Japanese yen in U.S. \$ } & = & \$ .011 \\\text { Exchange rate of euro in U.S. \$ } & = & \$ 1.40 \\\text { Exchange rate of euro in Japanese yen } & = & 140 \text { yen }\end{array}$$
What will be the yield for an investor who has $1,000,000 available to conduct triangular arbitrage?

• A) $100,000
• B) -$90,909
• C) 10%
• D) -9.09%

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Definitions:

Lump Sum

A lump sum is a single payment of money, as opposed to a series of payments made over time.

Compounded Quarterly

The method of calculating interest where the accumulated interest is added to the principal amount after each quarter.

Future Value

The worth of a current asset on a certain future date, calculated by presuming a specific growth rate over a period.