You are a U.S. investor with capital of $1,000,000. Consider the following quotations provided by 3 different banks:Bank of America: Bank of Toronto: Credit Suisse:
USD 0.80/CAD CHF 1.42/CAD USD 0.55/CHF
What is the implied cross-rate between CHF and CAD?
Is there a triangular arbitrage opportunity (We are ignoring transaction costs)?
If there is a triangular arbitrage opportunity, how can you earn arbitrage profit from the above exchange rates with $1,000,000?
What is your arbitrage profit in dollars?
At what implied cross-rate between CHF and CAD there will be no arbitrage opportunity?