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Assuming no transaction costs, suppose at a bank, the value of a Canadian dollar in U.S. dollars is $0.90; value of German mark in U.S.
Assuming no transaction costs, suppose at a bank, the value of a Canadian dollar in U.S. dollars is $0.90; value of German mark in U.S. dollars is $0.30 and value of Canadian dollar in German marks is DM3.02. 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.
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