If 1 euro is priced at $1.25 and if 1 euro will also buy 88 Japanese yen (€1 = ¥88), in equilibrium, with no arbitrage opportunities, how much is the cross rate between the yen and the dollar (yen per dollar exchange rate)?

So the exchange rate is that each dollar is worth 70.4 yens.

Step-by-step explanation:

We have that:

1 euro is priced at $1.25

1 euro will also buy 88 Japanese yen

This also means that:

$1.25 is priced at 88 Japanese yen

How much is the cross rate between the yen and the dollar (yen per dollar exchange rate)?

How much yens is 1 dollar?

This can be solved by a simple rule of three.

$1.25 - 88 yen

$1 - x yen

So the exchange rate is that each dollar is worth 70.4 yens.

x=-6/5y+12

Step-by-step explanation: 5x+6y+−6y=60−6y 5x/5=−6y+60/5 x=-6/5y+12