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You have contacted your bank and they have provided you with the following exchange rate quotations.

a. The value of the Japanense Yen in US dollars is $.00885

b. The value of the Mexico Peso in US dollars is $0.769

c. The value of the Mexican Peso in yen is y8.00

You have $10,000 and are looking to determine if there is a triangular arbitrage opportunity at your bank. Which one of the following statements is correct?

1. There is an arbitrage opportunity where you could earn $307 risk free

2. There is an arbitrage opportunity where you could earn $862 risk free

3. There is an arbitrage opportunity where you could earn $1,258

4. There is no arbitrage opportunity as the exchange rates are equilibrium.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92428134

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