A. The ER is real/$ 10, or $1 buys 10 real. The change in the...
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A. The ER is real/$ 10, or $1 buys 10 real. The change in the ER is what percentage wise, if at the end of the year the ER is r/$ 90, or 90 real buy $1? Show it in two ways. The one is real per dollars, and the other is dollars per real. You need to compute the percentage change in those 2 cases.
B. The Nigerian naira versus the US dollar is 7 to 1, i.e., 7 naira buy one dollar. The ER between the Swiss franc and the US dollar is one Swiss franc to 1.1 US $. Finally, the naira trades 7.02 per one Swiss franc. What kind of triangular arbitrage will induce a profit for you? Assume you start with $1 million. What action would you take to attain a profit in the situation described?
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