Which of the following steps would you take to make a triangular arbitrage strategy? Note: the steps do not need to be in order. Tick all the steps that apply. A small penalty will be applied for each incorrect answer that is ticked. Sell AUD buy NZD Sell EUR buy AUD Sell AUD buy EUR Sell NZD buy EUR Sell NZD buy AUD There is no arbitrage opportunity in this case Sell EUR buy NZD
Which of the following steps would you take to make a triangular arbitrage strategy? Note: the steps do not need to be in order. Tick all the steps that apply. A small penalty will be applied for each incorrect answer that is ticked. Sell AUD buy NZD Sell EUR buy AUD Sell AUD buy EUR Sell NZD buy EUR Sell NZD buy AUD There is no arbitrage opportunity in this case Sell EUR buy NZD
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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Question
You observe the following exchange rates at three different banks for the Australian dollar, Euro and New Zealand Dollar.
X bank AUD 1.6650/EUR
Y bank AUD 0.9213/NZD
Z bank NZD 1.8955/EUR
Assume you have AUD 1,000,000. Which of the following steps would you take to make a triangular arbitrage strategy?
Note: the steps do not need to be in order. Tick all the steps that apply. A small penalty will be applied for each incorrect answer that is ticked.
Sell AUD buy NZD
Sell EUR buy AUD
Sell AUD buy EUR
Sell NZD buy EUR
Sell NZD buy AUD
There is no arbitrage opportunity in this case
Sell EUR buy NZD
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