Question: A) 20,001.80 B) 11,111.11 C) 33,333.33 D) 36,000 2. Triangular arbitrage 1. 2. 3. 4. STEP: 2 of 4 Suppose that Cloudastries Bank is a

A) 20,001.80 B) 11,111.11 C) 33,333.33 D) 36,000 2. Triangular arbitrage 1. A) 20,001.80

B) 11,111.11

C) 33,333.33

D) 36,000

2. Triangular arbitrage 1. 2. 3. 4. STEP: 2 of 4 Suppose that Cloudastries Bank is a U.S.-based financial intermediary that serves the foreign exchange market. Assume that this bank is willing to both purchase and sell currency for the same rate. In other words, assume there is no bid/ask spread. Suppose Cloudastries has made the following direct quotations: Currency Dollar Spot Rate Mexican Peso $0.60 Euro $1.80 Additionally, Cloudastries has quoted a cross exchange rate of 1 euro = 3.04 pesos. Suppose that you have $20,000 with which to try to capitalize on triangular arbitrage. To start, you exchange these dollars for euros. If you use all $20,000 to purchase euros from Cloudastries, you would receive euros. Grade Step 2 TOTAL SCORE: 114 (to complete this step and unlock the next step)

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