IFIN - Lecture 2

How do we express prices of consumer goods and how is that different compared to expressing exchange rates (which can make the latter confusing)?

You have 500 EUR and want to exchange it to USD. How many USD will you get? (Note: Use 2 significant digits and "." as decimal point!)

You have 500 USD and want to exchange it to EUR. How many EUR will you get? (Note: Use 2 significant digits and "." as decimal point!)

Is there an arbitrage profit here? Can you work out how big it is if you start with 1mln USD?

Why are there two exchange rates for each currency pair and not just one? What can you do at either rate?

Is there an arbitrage profit here? Can you work out how big it is if you start with 1mln USD?

What was the % change in value of the SEK when USD/SEK went from 9.0109 to 8.5950?

(Note: Use 2 significant digits and "." as decimal point!)