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    Foreign Exchange Rate

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    The spot exchange rate for the euro is $1.6750/euro on Jan 1, 2003.
    A U.S. investor bought euro1,000,000 on Jan 1 and sold it six months later (june 1).
    A German investor bought $1,000,000 on Jan 1 and sold it six months later (june1).

    What should the $/euro rate have been on June 1 for the UK investor to make the same profits as the US investor?

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    Solution Preview

    Let the exchange rate be $x/Euro
    <br>US Investors Profit = 1,000,000 *(x-1.675)( he gets x dollars for every euro and had invested 1.675 dollars for every euro so profit for every euro = x-1.675)
    <br>UK Investors Profit = 1,000,000 * ...