Assume you can exchange $1 for ¥119.39 or €.7989 in New York.In Tokyo,the exchange rate is ¥1 = €.0068.If you have $1,200,how much profit can you earn using triangle arbitrage?

Question

Quizplus · Accepted Answer

First, convert $1,200 to yen: $1,200 * ¥119.39 = ¥143,268. Then, convert ¥143,268 to euros in Tokyo: ¥143,268 * €.0068 = €974.22. Finally, convert €974.22 back to dollars in New York: €974.22 / €.7989 = $1,219.45. The profit is $1,219.45 - $1,200 = $19.45.

Assume You Can Exchange $1 for ¥119