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      Question

      Suppose the following bilateral spot exchange rates are

      being quoted for the Danish krone (DKK), the US dollar (US$) and the euro (€): US$/€ = 1.5 DKK/€ = 7.0 DKK/$ = 5.0 If you start with 100€, the most you could end up with in a single round of triangular arbitrage would be...
      A €107.14 Correct Answer Incorrect Answer
      B €750 Correct Answer Incorrect Answer
      C €150.5 Correct Answer Incorrect Answer
      D €103.1 Correct Answer Incorrect Answer

      Solution

      Convert €100 to $150 (1.5*100) to DKK 750 (150*5) and back to €107.14 (750/7).

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