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Three Exchange Rates are as follows: 1) US Dollars

July 20, 2020/in Feeds /by admin

Three Exchange Rates are as follows: 1) US Dollars (USD) to Japanese Yens (JYP) at JPY 95 to USD 1
2) JPY to Euros (EUR) at JPY 106.0 to EUR 1

3) EUR to USD at EUR 0.9 to USD 1

Suppose you start with USD 100,000, and do one round of “triangular arbitrage”, that is convert make a total of 3 foreign exchange transactions to start from USD and return to USD. What will be your profit in USD?

(Note: Profit will be Final USD amount – $100,000. There are not transaction costs.) Also note The Euro-USD exchange rate has the EUR relatively under priced, so start by converting US dollars to Euros.