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Alabama Bank is willing to buy or sell British pounds for $1.95. The bank is willing to buy or sell Mexican pesos at an exchange
Alabama Bank is willing to buy or sell British pounds for $1.95. The bank is willing to buy or sell Mexican pesos at an exchange rate of 13 pesos per dollar. The bank is willing to purchase British pounds at an exchange rate of 1 peso = 0.04 British pounds. Show how you can make a profit from triangular arbitrage.
- You can attempt triangular arbitrage by converting dollars to pounds, and then converting pounds to pesos, and then converting pesos to dollars.
- You can attempt triangular arbitrage by converting dollars to pesos, and then converting pesos to pounds, and then converting pounds to dollars.
What would your profit be if you had $80,000? Do not round intermediate calculations. Round your answer to the nearest dollar.
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