In: Finance
Anna specializes in cross-rate arbitrage. She notices the following quotes:
Assume that she has $1 million available to conduct the arbitrage, show how much Anna can make a triangular arbitrage profit by trading at these prices.
What yen/euro price will eliminate the triangular arbitrage opportunity?
1. Bank 1:Yen / US dollar = JPY 108.0000 / USD
2. Bank 2: US dollar / euro = USD 1.1200/ EUR
3. Bank 3: Yen / EUR = JPY 124.0000 / EUR