Question
The Venezuelan bolivar versus the US dollar is 7 to 1, i.e., 7 bolivars buy one dollar. The ER between the Swiss franc and the
The Venezuelan bolivar versus the US dollar is 7 to 1, i.e., 7 bolivars buy one dollar. The ER between the Swiss franc and the US dollar is one Swiss franc to 1.1 US $. Finally, the bolivar trades 7.02 per one Swiss franc.
a. What kind of triangular arbitrage will induce the highest profit for you?
b. Assume you start with $1 million, or the equivalent of it in the other currencies. (Note we are asking for the highest profit and not any profit.)
some are getting different answers and also do I need to convert any of the currencies before working on the calculations?
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