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question1 You can buy and sell currency at the following exchange rates: ??? 0.047/???,    ??? 17.25/???,   ...

question1

You can buy and sell currency at the following exchange rates:

??? 0.047/???,    ??? 17.25/???,    ??? 0.79/???

a.Is there an arbitrage in these exchange rates? Please provide evidence for your answer.

b.If you start out with USD 100,000, what trades would you make to take advantage of any arbitrage you find? How many USD would you end up with?

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Answer #1

Arbitrage profit = $2626.5 approx

$inflow = $102626.5

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