1. Suppose your company imports computer motherboards from Singapore. You have just placed an order for 30,000 motherboards at a cost to you of 229.50 Singapore dollars (SND) each. The spot exchange rate is SND1.2528 per $1. You will pay for the shipment when it arrives in 90 days. You can sell the motherboards for $195 each. If the exchange rate goes up by 10% over the next 90 days, what will be the change in your profit?
a. -$153,918.50
b. –$256,321.84
c. $354,310.34
d. $499,608.16
2. Suppose the Japanese yen exchange rate is ¥104 = $1, and the British pound exchange rate is £1 = $1.69. The cross-rate is ¥179 = £1. What is your arbitrage profit if you had $1,000?
a. $26.84
b. $18.43
c. $32.17
d. $45.91