1. 13. Trilateral arbitrage (advanced). Assuming that the pound is worth 1.1567 euros in Paris and 1.4393...
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1. 13. Trilateral arbitrage (advanced). Assuming that the pound is worth 1.1567 euros in Paris and 1.4393 Swiss francs in Zurich, can Britain-based arbitrageurs make profits, given that the Swiss franc is worth 0.8102 euros in Paris?
a. Work out the solution first by disregarding transaction costs.
b. Assuming that transaction costs amount to 1/16 of 1 percent of the amount transacted, are there still exploitable arbitrage opportunities?
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