Chase quotes the current ¥/$ spot rate at 109.55 bid—109.58 ask.
i) How many US dollars does it take to buy 1 million yen?
ii) How many US dollars will be received for selling 1 million yen?
b) Additionally, Bank of America quotes 109.51 bid—109.54 ask (¥/$). Can you make money by trading a dollar? If yes, how, and how much is your final profit? Otherwise, explain why not.
c) Will this situation persist? Why or why not?
d) Separately, you see cross rates of 1.27$/€, 1.84$/£, and 1.46€/£. Ignoring costs (bid- ask spreads), can you make money? If yes, specify all necessary transactions, clearly stating the currencies you are buying and selling and the exchange rates. How much is your final profit? Otherwise, explain why not.