What Role Does Triangle Arbitrage Play in the Foreign Exchange

question 69

Essay

What role does triangle arbitrage play in the foreign exchange markets? What might limit the effectiveness of triangle arbitrage?

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Definitions:

Compounded Monthly

Interest that is calculated on the principal and the previously earned interest on a monthly basis, leading to the accumulation of increasingly larger amounts.

Month-end Withdrawals

Financial transactions to remove money from an account or investment at the end of the month, often for budgeting or payment purposes.

Investment Account

A financial account that is used for holding and transacting securities or other investment instruments.

Compounded Quarterly

An interest calculation method where interest is added to the principal sum four times a year.