The exchange rates in New York for $1 are Can$1.0929 or £.7247. In Toronto, Can$1 will buy £.6721. How much profit can you earn on $8,000 using triangle arbitrage?
1) Convert $8,000 in Canadian dollar at $1 = Can$1.0929
Therefore, Amount = Can$1.0929*8,000
Amount in Canadian Dollars = Can$8,743.2
2) Now convert this amount into euros at Can$1 = Euro0.6721
Amount in Euros = Euro0.6721*8,743.2
Amount in Euros = Euro5,876.30
3) Now convert it back into dollars at Euro 1 = $1/0.7247
Amount in Dollars = $5,876.30/0.7247
Amount in Dollars = $8,108.60
Profit using Triangular Arbitrage = 8,108.60 - 8,000
Profit using Triangular Arbitrage = $108.60
Get Answers For Free
Most questions answered within 1 hours.