Company N has recently traded with clients from Japan and South America, resulting in the accrual of new accounts receivable. The firm expects to collect several pending invoices soon but is also anticipating foreign exchange risks. To minimize these risks, they have devised a plan and received exchange rate quotes from multiple banks. Bank A offers to buy or sell Japanese yen at a rate of 140 yen per dollar, while Bank B offers to buy or sell the Argentine peso at a rate of $0.55 per peso. Also, Bank C offers to exchange Japanese yen at a rate of 40 yen per Argentine peso.
a. How to make a profit from triangular arbitrage and what profit would be if having $2,500,010.
b. Explain the effect -- appreciation or depreciation on each of the exchange rates until triangular arbitrage would no longer be possible.