Question Details

Explain the concept of triangular arbitrage 



1.	Triangular Arbitrage. Explain the concept of triangular arbitrage and the scenario necessary for it to be plausible.

2.	Triangular Arbitrage.  Assume the following information:

		Quoted Price
	Value of Canadian dollar in U.S. dollars	$.90
	Value of New Zealand dollar in U.S. dollars	$.30
	Value of Canadian dollar in New Zealand dollars	NZ$3.02

	Given this information, is triangular arbitrage possible?  If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of triangular arbitrage?



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