Question

Assume the following information:

Exchange rate of Singapore dollar in USD = 0.32 USD/SGD

Exchange rate of pound in USD = 1.49 USD/GBP

Exchange rate of pound in Singapore dollars = 4.8 SGD/GBP

If you have 1 million USD to conduct one cycle of triangular
arbitrage, what will be your profit?

Answer #1

USD | GBP = USD/ 1.49 | SGD = GBP x 4.8 | USD=SGP x .32 |

1000000 | 671140.9396 | 3221476.51 | 1030872.483 |

US Dollar has Inceased by | 30872.48 |

Explanation:

we have USD 1000000 in hand. If we convest it to GBP, we will get Equivalent GBP = 1000000/1.49 = GBP 671140. 94

If we convert GBP of 671140. 94 into SGD, we will get = 671140. 94 x 4.8 = SGD 3221476.51 .

Now, we are again converting the SGD into US dolloar using convesrion rate 0.32 USD / SGD

We got USD value of 1030872.48 USD.

Initial investment 1000000

Hence, Profit = 1030872.48 - 1000000 = 30872.48

Assume the following information:
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