Royal bank quotes a value for the japanese yen (¥) of $0.007, and a value for the canadian dollar (c$) of $0.821. the cross exchange rate quoted by the bank for the canadian dollar is ¥118.00. you have $500,000 to conduct triangular arbitrage. how much will you end up with if you conduct triangular arbitrage?

Question

Cameron Mayer

Business

24 February, 12:33

Royal bank quotes a value for the japanese yen (¥) of $0.007, and a value for the canadian dollar (c$) of $0.821. the cross exchange rate quoted by the bank for the canadian dollar is ¥118.00. you have $500,000 to conduct triangular arbitrage. how much will you end up with if you conduct triangular arbitrage?

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Alia Rosales · Answer 1

If you have $500,000 and the yen exchange rate is. 007, you would have

500,000/.007 = 71,428,571.43 yen

Then, if the exchange rate to Canadian dollars is 118 then you would have

71428571.43/118 = 605,326.88 dollars

Then if the exchange rate back to US dollars is. 821, you would end up with

605,326.88 /.821 = $737,304.36