Question

1. The Australian dollar is trading at A$1.2653 / US$. The euro is trading at Euro 0.6200 / US$. If the rate between Euro and Australian dollar is Euro 0.4900 / A$, is there a profit opportunity through arbitrage? If so, work out the profit, if your starting amount is $100

Answer 1

Solution :-

1 US$ = A$1.2653

1 US$ = Euro 0.6200

Therefore

Indirect Quote between A$ and Euro

A$1.2653 = Euro 0.6200

1 A$ = Euro 0.6200 / 1.2653 = Euro 0.4900

Direct Quote Between A$ and Euro  

1 A$ = Euro 0.4900

As there two rates are equal so there is no arbitrage opportunity

If there is any doubt please ask in comments