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You observe the following exchange rate quotes for the South African Rand (ZAR), and the Swedish Krona (SEK): ZAR 14.7918/$ SEK 8.6686/ $ SEK 0.5534/
- You observe the following exchange rate quotes for the South African Rand (ZAR), and the Swedish Krona (SEK):
ZAR 14.7918/$
SEK 8.6686/ $
SEK 0.5534/ ZAR
a) If you start with $ 1 million, what arbitrage profit in dollars can you make using triangular arbitrage? Show all your calculations in a clear and orderly fashion. No credit will be given for just answers.
b) At what exchange rate (SEK/ZAR) will triangular arbitrage yield zero profits?
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