Business, 21.05.2021 01:40 hwilson118027

Suppose you trade dollars and euros for a bank that has branches in New York and Rome. You can electronically transfer the funds between the two branch locations at no cost, and trading commissions are negligible. The current dollar-per-euro exchange rate in New York is E$/EUR^NY = 1.5695, while in Frankfurt, it is E$/EUR^FR = 1.627. You can make a profit for the bank if you buy euros in_and sell them in.
Other foreign exchange traders will buy euros in_and sell them in_. They will also buy dollars in_and sell them in_. As a result, the dollar-per-euro exchange rate in Frankfurt (E$/EUR^FR) will_, and the dollar-per-euro exchange rate in New York (E$/EUR^NY) will___.

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