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You go to a bank and are given these quotes: You can buy a euro for 14 pesos. The bank will pay you 13 pesos
You go to a bank and are given these quotes: You can buy a euro for 14 pesos. The bank will pay you 13 pesos for a euro, You can buy a U.S. dollar for .9 euros. The bank will pay you .8 Euros for a U.S. dollar. You can buy a U.S. dollar for 10 pesos. The bank will pay you 9 pesos for a U.S. dollar, a. You have $1,000. Conduct the following transactions: first convert dollars to euros, then euros to pesos, and then pesos to dollars. Does this triangular arbitrage strategy generate a profit? (8 points) b. You have $1,000. Conduct the following transactions: first convert dollars to pesos, then pesos to euros, and then euros to dollars. Does this triangular arbitrage strategy generate a profit? ( points)
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