Suppose that a bank quotes the following rates: JPY 58.00 = CHF1
CHF1.52 = USD1
JPY123.38 = USD1
Which of the following transactions would produce an arbitrage profit for a US investor?
A) Buy 123.38 yen, exchange them for Swiss francs and sell the Swiss francs that you receive.
B) Buy 1.52 Swiss francs, exchange them for Japanese yen and sell the yen that you receive.
C) Buy both Japanese yen and Swiss francs.
D) There are no transactions that would not involve at least some risk.
Correct Answer:
Verified
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