1. Triangular arbitrage is defined as being able to take a unit of currency from the first, through a second and third and back to the first, and make a profit.Do you think these FX spot rates display any triangular arbitrage (True/False)?2. Starting with 1000 US dollars, how many dollars would you end up with if you moved first to C$, then Yen before returning to USD (answer in USD)

 

 

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Cross Exchange Spot Rates with spreads: NB Canadian Dollar to/from Yen is quoted in Yen/C$. TO FROM Local Gold Selling Price/oz Mid rate to US$ JPY CAN USD JPY 79.000 Yen/C$ 99.000 Yen/US$ 200,000 Yen/oz 100 Yen/US$ CAN 81.000 Yen/C$ X 1.240 C$/US$ 2,500 C$/oz 1.25 C$/US$ USD 101.000 Yen/US$ 1.260 C$/US$ 2,000 US$/oz Cross Exchange Spot Rates with spreads: NB Canadian Dollar to/from Yen is quoted in Yen/C$. TO FROM Local Gold Selling Price/oz Mid rate to US$ JPY CAN USD JPY 79.000 Yen/C$ 99.000 Yen/US$ 200,000 Yen/oz 100 Yen/US$ CAN 81.000 Yen/C$ X 1.240 C$/US$ 2,500 C$/oz 1.25 C$/US$ USD 101.000 Yen/US$ 1.260 C$/US$ 2,000 US$/oz

Answer rating: 100% (QA)

ANSWER TRUE A triangular arbitrage opportunity occurs when the exchange rate of a currency does not ... View the full answer