global finance 666

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global finance 666

You have following information on exchange rate:

Date

USD/GBP

HKD/USD

Jan 2010

1.78

7.7

Mar 2010

1.90

7.75

For the period of 01/2010 to 03/2010, which of the following statement is correct?

A. GBP appreciates against USD and HKD depreciates against USD

B. GBP depreciates against USD and HKD appreciates against USD

C. USD appreciate against both GBP and HKD

D. None of the above

Assume that there is no transaction cost and you observe the following quotation:
1. USD/HKD: 0.1250
2. JPY/USD: 116.20
3. HKD/JPY: 0.062
If you have HKD1,000,000 and you try triangular arbitrage, which is the correct way of trade:

A. HKD==>USD==>JPY

B. HKD==> à USD==> à JPY==> à HKD

C. HKD==> à JPY ==>à USD

D. HKD à==> JPY ==>à USD ==>à HKD