Triangular Arbitrage Illustration 4


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Triangular Arbitrage Illustration 4

 

The following spot rates are observed in N.Y. Forex market-

DEM/USD            1.6345/50

JPY/USD              125.35/45

In the Frankfurt market the JPY/DEM spot rate is being quoted at 74.65/85.

Is there an arbitrage opportunity? What transaction have to executed to it, if there is?

(Ans.: (a) Cross Rate 76.6667/76.7513, Gain 24,271)


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