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Assume the following  information:                                                                                                           Quoted Price   Value of Canadian dollar in U.S. dollars                                           $.90 Value of New Zealand dollar in U.S. dollars                                    $.30 Value of Canadian dollar in New Zealand dollars                     NZ$3.02 Given  this information,  is triangular  arbitrage possible?   If so, explain  the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000  to use. What market  forces would  occur  to eliminate   any  further  possibilities   of triangula r arbitrage?

Assume the following  information:                                                                                                           Quoted Price   Value of Canadian dollar in U.S. dollars                                           $.90 Value of New Zealand dollar in U.S. dollars                                    $.30 Value of Canadian dollar in New Zealand dollars                     NZ$3.02 Given  this information,  is triangular  arbitrage possible?   If so, explain  the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000  to use. What market  forces would  occur  to eliminate   any  further  possibilities   of triangula r arbitrage?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Assume the following  information:

 

 

 

                                                                                                    Quoted Price

 

Value of Canadian dollar in U.S. dollars                                           $.90

Value of New Zealand dollar in U.S. dollars                                    $.30

Value of Canadian dollar in New Zealand dollars                     NZ$3.02

Given  this information,  is triangular  arbitrage possible?   If so, explain  the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000  to use. What market  forces would  occur  to eliminate   any  further  possibilities   of triangula r arbitrage?

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