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Suppose you are in New York and notice the below exchange rates. Use these and $100...

Suppose you are in New York and notice the below exchange rates. Use these and $100 to conduct arbitrage and calculate the profit earned. 1 USD = 69.13 Indian Rupee, 1 USD = 1.33 Canadian Dollar, and 1 Canadian Dollar = 52.87 Indian Rupee. (8 pts.)

please show work!!

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Answer #1

Profit is $1.717

....

Starting with $100. Exchange it for canadian dollar. You will get 1.33×100 i.e 133 Canadian dollar Canadian dollar. Now since 1 Canadian dollar is equal to 52.87 Indian rupee so 133 Canadian dollar will be equal to 133×52.87 i.e 7031.71 indian rupees. Now $1/69.13 is equal to 1 rupee. Changing 7031.71 rupee in dollar will be equal to $101.717.

We started with $100 and in the end we have $101.717. there is a gain of $1.717(profit earned).

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