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Suppose an investor receive the following spot quotes from the bank for the Australian dollar & the euro: Bid Ask AUD 1.3775/USD AUD 1.3785/USD $
Suppose an investor receive the following spot quotes from the bank for the Australian dollar & the euro:
| Bid | Ask |
| AUD 1.3775/USD | AUD 1.3785/USD |
| $ 1.1638/euro | $ 1.1645/euro |
| AUD 1.6063/euro | AUD 1.6073/euro |
Is triangular arbitrage profitable for an Australian investor with AUD 1million to apply toward arbitrage? Show the work to support the answer. If arbitrage is profitable, how would one expect the quotes to adjust? Would the result change if the investor making the investment was an American investor with US$1million?
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