1. Assuming no transaction costs, suppose the Singapore dollar—U.S. dollar (S$/$) spot exchange rate is S$1.52/$, the Canadian dollar—U.S. dollar (CD/$) spot rate is CD1.24/$ and the Singapore dollar—Canadian dollar (S$/CD) spot rate is S$1.18/CD.

1. Show the transactions you would need to take advantage of a triangular arbitrage opportunity.
2. Determine the triangular arbitrage profit that is possible if you have $1,000,000.

Answer rating: 100% (QA)

Solution 1 Cross Exchange rate S Rate SCD x Rate CD 118 x 124 146 Arbitrage is possible as c... View the full answer