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Question: A)      Assuming triangular arbitrage is not possible and exchange rates...

a)      Assuming triangular arbitrage is not possible and exchange rates are priced efficiently, use the following quotes to determine the percentage change in the NZD against the JPY.

Today

1 year ago

AUD NZD

1.0362

1.0965

AUD JPY

71.85

74.65

                                                  

b)     You have the following quotes from three different banks:

Big Time Bank

71.85 JPY AUD

Fack Bank

0.9601 AUD NZD

Trusty Bank

69.99 JPY NZD

If you can buy or sell at the given quotes, how much profit can you make using AUD $1 000 000. Clearly show each of your trades and give your profit in AUD.        

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jeff jeffy answered 3 months ago
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