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Question
| $/Pound | SFr/$ | SFr/Pound | |
| New York | 00 | 1.00 | - |
| London | 2.00 | - | 3.00 |
| Geneva | - | 1.00 | 3.00 |
Suppose that you are an arbitrageur that starts with $100 in New York. Which of the following paths is correct in order to make arbitrage profit?
a. Buy pound in New York → sell pound for SFr in New York → sell SFr for dollar in New York.
b. Buy SFr in New York → sell SFr for pound in New York → sell pound for dollar in New York.
c. Buy SFr in New York → sell SFr for pound in Geneva → sell pound for dollar in New York.
d. Buy pound in New York → sell pound for SFr in London → sell SFr for dollar in New York.
Answer
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