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The fact that we can derive the British pound/Polish zloty exchange rate, say, from the dollar/pound rate and the dollar/zloty rate follows from ruling out
The fact that we can derive the British pound/Polish zloty exchange rate, say, from the dollar/pound rate and the dollar/zloty rate follows from ruling out a potentially profitable arbitrage strategy known as triangular arbitrage. As an example, suppose that the British pound price of a zloty was below the British pound price of a dollar times the dollar price of a zloty, as depicted by the hypothetical data in the following table. Exchange Rate Value British pound price of a zloty 2.8 British pound price of a dollar 1.12 U.S. dollar price of a zloty 3.80 Using $100 to purchase the Polish currency directly would obtain zlotys. (Round your answer to one decimal place.)
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