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Basic Question 19 of 19
The JPY/USD bid-ask rate observed in Tokyo is 80.4750 - 80.4883. An analyst just came up with an implied JPY/USD bid-ask rate based on EUR/USD and JPY/EUR rates. Which of the following implied bid-ask rate would seem to be wrong?
B. 80.4800 - 80.4900.
C. 80.4742 - 80.4748.
A. 80.4550 - 80.4795.
B. 80.4800 - 80.4900.
C. 80.4742 - 80.4748.
User Contributed Comments 1
| User | Comment |
|---|---|
| skarthi146 | Well, this rate may be possible for a moment and then arbitrageurs jump in and then disappears. I think the question should be asking us which price will allow arbitrage. |
I am using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
Learning Outcome Statements
calculate and interpret the bid-ask spread on a spot or forward foreign currency quotation and describe the factors that affect the bid-offer spread;
identify a triangular arbitrage opportunity and calculate its profit, given the bid-offer quotations for three currencies;
CFA® 2025 Level II Curriculum, Volume 1, Module 8.