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?
|USD||GBP = USD/ 1.49||SGD = GBP x 4.8||USD=SGP x .32|
|US Dollar has Inceased by||30872.48|
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
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