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Find possibilities of triangular arbitrage

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Triangular Arbitrage. Assume the following information:

St = .7 in AUDUSD

St = 1.30 in GBPUSD

St = 2 in GBPAUD

Is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy (expressed as a % per unit borrowed). What market forces would occur to eliminate any further possibilities of triangular arbitrage?

Reference no: EM132673122

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