Triangular Arbitrage

CFA Level II Economics
#1

I’m a little confused on how we know to use the bid or the ask when converting currencies. I know they say “up the bid and down the ask” but drawing it out it doesn’t seem to work that way. I assume if we’re going from Direct to Foreign we use the ask and if were going F to D we use the bid. So it depends on how they give us the quote? Can someone please clean this up for me.

Thanks

#2

I wrote an article on triangular arbitrage just for you: http://financialexamhelp123.com/triangular-arbitrage/

#3

thank you much!

#4

You’re welcome even more.

#5

the first link brought me right to a wonderful explanation of triangular arbitrage. is there something similar to explain the forward/premium discount question?

thanks

#6

just not sure why the 90/360 goes in the numerator and then again in the denominator when multiplied by the 1 plus r?