The three Exchange Rates are as follows: 1) US Dollar (USD) - Canadian Dollar (CAD) for 1.05

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The three Exchange Rates are as follows:

1) US Dollar (USD) - Canadian Dollar (CAD) for 1.05 CAD - 1 USD

2) CAD - Euro (EUR) for 1 CAD - 1 EUR 3) EUR - 0.72 - USD

Let's say you start with 1 100,000 USD and do one round of "triangle arbitrage", that is, you trade a total of 3 currencies to start from USD and return to USD.

What will your earnings be in USD?

(Note: Profit will be the Final USD amount - $100,000. No transaction costs.)

Related Book For answer-question

Advanced Accounting

ISBN: 978-0077431808

10th edition

Authors: Joe Hoyle, Thomas Schaefer, Timothy Doupnik

See More Books

Posted Date: Mar 15, 2023 01:49 AM

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The three Exchange Rates are as follows: 1) US Dollar (USD) - Canadian Dollar (CAD) for 1.05

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To perform triangle arbitrage we need to look for an opportunity where the exch... View the full answer

Advanced Accounting

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