Question

Swissie Triangular Arbitrage. The following exchange rates are available to you.​ (You can buy or sell at the stated​ rates.) Assume you have an initial SF 13,000,000. Can you make a profit via triangular​ arbitrage? If​ so, show the steps and calculate the amount of profit in Swiss francs​ (Swissies).

Mt Fuji Bank	90.34 Euro/$
Mt. Rushmore Bank	SF 1.02/$
Mt. Blanc Bank	91.97 Euro/SF

Calculate First arbitrage opportunity attempt below: (Round to the nearest cent)

Attempt number 1: Start with SF to $

Step 1: SF to $ ___________

Step 2: $ to Yen ________

Step 3: Yen to SF ________

Profit or Loss ____________ SF

Attempt ends in a (Profit or Loss)?

- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

Attempt number 2: Start with SF to Yen: (Round to two decimal places)

Step 1: SF to yen _________

Step 2: yen to $ ________

Step 3: $ to SF_________

Profit or Loss _________ SF

Attempt ends in a (Profit or loss)?

Answer 1

Attempt number 1: Start with SF to $

Step 1: SF to $ :
=13000000/1.02
=12745098.04

Step 2: $ to Yen :
=13000000/1.02*90.34
=1151392157

Step 3: Yen to SF :
=13000000/1.02*90.34/91.97
=12519214.49

Profit or Loss 12519214.49-13000000=-480785.5076 SF

Attempt ends in a Loss

Attempt number 2: Start with SF to Yen:

Step 1: SF to yen :
=13000000*91.97=1195610000.00

Step 2: yen to $ :
=13000000*91.97/90.34=13234558.34

Step 3: $ to SF :
=13000000*91.97/90.34*1.02=13499249.50

Profit or Loss 13499249.50-13000000=499249.5019 SF

Attempt ends in a Profit