If 1 Euro Is Priced at $1

question 141

Multiple Choice

If 1 euro is priced at $1.25 and if 1 euro will also buy 88 Japanese yen (€1 = ¥88) , in equilibrium, with no arbitrage opportunities, how much is the cross rate between the yen and the dollar (yen-dollar rate) ?

• A) ¥150/$
• B) ¥70.4/$
• C) ¥20/$
• D) ¥5/$

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