You observe the following rates for the Swiss Franc, US dollar, and British Pound: $0.9804/CHF; 0.70/$ You
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Question:
You observe the following rates for the Swiss Franc, US dollar, and British Pound: $0.9804/CHF; £0.70/$ You also notice a bank currently offering CHF 1.008/£
a. Assuming the bid-ask spread is zero, given this information, is there a possibility for triangular arbitrage?
b. Why or why not?
c. If there is an opportunity, suppose you start with $1 million, how much could you earn?
Related Book For
Financial Markets And Institutions
ISBN: 978-0132136839
7th Edition
Authors: Frederic S. Mishkin, Stanley G. Eakins
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