Determine the triangular arbitrage profit

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You are a currency trader that is always seeking to make triangular arbitrage profits in the FX market. You notice the following quotes by three different banks today.

DBS Bank LTD -> The Singapore dollar—U.S. dollar (S$/$) spot exchange rate is S$1.60/$

B2B Bank -> The Canadian dollar—U.S. dollar (CD/$) spot rate is CD1.33/$

Far Eastern Bank -> The Singapore dollar – Canadian dollar (S$/CD) spot rate is S$1.15/CD.

a. Determine if there is or there is not an opportunity to make arbitrage profit

b. If you determined that there is an opportunity to make arbitrage profit in part a, determine the triangular arbitrage profit that is possible if you have $1,000,000. Please note that to get full credit you need to provide a description of and outcome of each transaction you ought to do to make the final profit. If your answer to part a is that there is no arbitrage opportunity possible just write “NA” for the answer to this part of question 1.

Reference no: EM131203759

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