# An American business pays \$10,000, \$15,000, and \$20,000 to suppliers in, respectively, Japan, Switzerland, and Canada. How much, in local currencies, do the suppliers receive? Set up an arbitrage scheme with your capital. What is the gain (loss) in dollars?

Country Contract \$/Foreign Currency
30-day .8417
90-day .8395
Japan-yen Spot .004684
30-day .004717
90-day .004781
Switzerland Spot .5139
30-day .5169
90-day .5315

Question 1. (Spot exchange rates) An American business pays \$10,000, \$15,000, and \$20,000 to suppliers in, respectively, Japan, Switzerland, and Canada. How much, in local currencies, do the suppliers receive?

Question 2. (Exchange rate arbitrage)You own \$10,000. The dollar rate in Tokyo is 216.6743. The yen rate in New York is given in the preceding table. Are arbitrage profits possible? Set up an arbitrage scheme with your capital. What is the gain (loss) in dollars?

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...suppliers in, respectively, Japan, Switzerland, and Canada. How much, in local currencies, do the suppliers receive?

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The currencies will be converted at the spot rates

1 JPY= 0.004684 USD or 1 USD= 1 / 0.004684 JPY
1 CHF= 0.5139 USD or 1 USD= 1 / 0.5139 CHF