Your friendly foreign exchange trader has given you the following currency cross rates. The quotes are expressed as units of the currency represented in the left-hand column per unit of currency shown in the top row. Consider the dollar rates to be the quotes from which the cross rates are set.

1. Do any triangular arbitrage opportunities exist among these currencies? Assume that any deviations from the theoretical cross rates of 5 points or less are due to transaction costs.
2. How much profit could be made from a $5 million transaction associated with each arbitrageopportunity?

  • CreatedJune 27, 2014
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