QUESTION 16 Given the folowing spot quotes : EURGBP 0.6850 GBPUSD 1.9920 EURUSD 1.2200 Notation "XYZABC n" means one needs n units of currency ABC to buy one unit of curre Do a triangular arbitrage starting with EUR 100,000,000. What is your profit in USD? 19,597,000 USD 14,452,000 USD 8,027,000 USD or arbitrago

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 33QA
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QUESTION 16
Given the folowing spot quotes :
EURGBP 0.6850
GBPUSD 1.9920
EURUSD 1.2200
Notation "XYZABC n" means one needs n units of currency ABC to buy one unit of currency XYZ.
Do a triangular arbitrage starting with EUR 100,000,000.
What is your profit in USD?
19,597,000 USD
14,452,000 USD
8,027,000 USD
There is no opportunity for arbitrage
Transcribed Image Text:QUESTION 16 Given the folowing spot quotes : EURGBP 0.6850 GBPUSD 1.9920 EURUSD 1.2200 Notation "XYZABC n" means one needs n units of currency ABC to buy one unit of currency XYZ. Do a triangular arbitrage starting with EUR 100,000,000. What is your profit in USD? 19,597,000 USD 14,452,000 USD 8,027,000 USD There is no opportunity for arbitrage
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