Question: Urgent help! Thank you! (Ch. 7) Triangular Arbitrage. Assume the following information: St=.62 in AUDUSD St=1.12 in GBPUSD St=1.82 in GBPAUD Where GBP is the
Urgent help! Thank you!
(Ch. 7) Triangular Arbitrage. Assume the following information: St=.62 in AUDUSD St=1.12 in GBPUSD St=1.82 in GBPAUD Where GBP is the British pound, AUD is the Australian dollar, and USD is the U.S. dollar. Is triangular arbitrage possible? (5 points) If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy (expressed as a % per unit borrowed). ( 20 points) What market forces would occur to eliminate any further possibilities of triangular arbitrage? ( 8 points) (Ch. 7) Triangular Arbitrage. Assume the following information: St=.62 in AUDUSD St=1.12 in GBPUSD St=1.82 in GBPAUD Where GBP is the British pound, AUD is the Australian dollar, and USD is the U.S. dollar. Is triangular arbitrage possible? (5 points) If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy (expressed as a % per unit borrowed). ( 20 points) What market forces would occur to eliminate any further possibilities of triangular arbitrage? ( 8 points)
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