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Suppose you observe the following exchange rates: $1 = 1.07; 1 = 0.88; and $1 = 0.83 Suppose you start with $100. Calculate a cross
Suppose you observe the following exchange rates: $1 = 1.07; 1 = 0.88; and $1 = 0.83
Suppose you start with $100. Calculate a cross rate using any one pair of currencies. Is there an arbitrage opportunity? Describe the steps of triangular arbitrage and state your profits in %. (Hint: use $ as one of the cross rate currencies).
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