Triangular Arbitrage Illustration 11
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Swiss Exporter who sells to Denmark must sell Euros and Purchase Swiss Francs.
Available rates are:
CHF 1.7654 = 1 USD
EUR 1.1918 = 1 USD
EUR 0.6566 = 1 CHF
Should he use CHF EUR quote or cross exchange using USD quotes?
(Ans. Cross exchange rate would be EUR 0.6751 = 1 CHF whereas available rate is EUR 0.6566 = 1 CHF. The exporter has to buy CHF. He will go for cheaper rate. He will choose 0.6566 Rate)
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