Question: Triangular arbitrage Consider the following information given by dealers (direct quotes in each country): 1.3755 8 ($/Euro); 5.0043-55 ($/SF); 3.0048-55 (Euros/SF) What level of transaction

Triangular arbitrage

Consider the following information given by dealers (direct quotes in each country):

1.3755 8 ($/Euro); 5.0043-55 ($/SF); 3.0048-55 (Euros/SF)

What level of transaction costs in each market will eliminate triangular arbitrage?

7.008% in each market

Now consider a quote for the $ in Germany:

0.6778 -85.

Is there a possibility of geographic arbitrage?

PLEASE SHOW WORK

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