Can you use triangular arbitrage to generate profit

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Reference no: EM132017752

Assume the following:

You can buy a euro for 14 pesos.

The bank will pay you 13 pesos for a euro.

You can buy a U.S. dollar for .9 euros.

The bank will pay you .8 Euros for a U.S. dollar.

You can buy a U.S. dollar for 10 pesos.

The bank will pay you 9 pesos for a U.S. dollar.

You have $1,000.

Can you use triangular arbitrage to generate a profit? If so, explain the order of the transactions that you would execute, and the profit that you would earn. If you cannot earn a profit from triangular arbitrage, explain why.

Reference no: EM132017752

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