Bank A quotes you that $1 will buy 2 Argentinean pesos or 5 Danish krone. At the same time, bank B provides you a quote of 3 pesos to buy 5 krone. Thus, there exists a potential for immediate profit via ___________________.

Question

Quizplus · Accepted Answer

Triangle arbitrage is the correct answer because it involves taking advantage of the price differences between three currencies in the foreign exchange market by converting one currency to another, then converting a second currency to a third, and finally converting the third currency back to the original currency, all in an attempt to gain a profit from the discrepancies in the currency exchange rates quoted by the banks.

Bank a Quotes You That $1 Will Buy 2 Argentinean