(BP) from several currency dealers around the world. Currency Dealer in Zurich Hong Kong London New York Bid/Ask Quotes for BP $1.4463-71 $1.4471-76 $1.4469-75 $1.4460-70 a) In order to take advantage of locational arbitrage‚ a currency speculator should: (i) Buy BP from the New York dealer at the ask price‚ and (ii) Sell BP to the Hong Kong dealer at the bid price b) Calculate the maximum profit a currency speculator‚ with access to $2‚500‚000‚ can make in one round
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1 Covered interest arbitrage refers to: a. making a riskless profit off of exploiting a mispriced forward rate. b. making a riskless profit off of mispricing in crossrates. c. making a riskless profit off of different spot rates from two different banks. d. None of the answers are correct. correct: a 2 You observe the following bid-ask quotes from Dragon Bank and Skytel Bank for the Euro: $1.25-$1.28 and $1.27-$1.29. Is there a profit from locational arbitrage? a. yes‚ the profit is $0.02/Euro
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forward rate of £ = $1.58004 One-year U.S. interest rate = 8.00% One-year British interest rate = 9.09% One-year Australian interest rate = 7.00% 1. Determine whether triangular arbitrage is feasible‚ and if so‚ how it should be conducted to make a profit. 2. Using the information in question 1‚ determine whether covered interest arbitrage is feasible between Pound and US$‚ and between A$ and US$. Furthermore if so‚ how you should be conducted to make a profit and how much would you make with one million
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38 GTQ 10.Swiss Franc SF 12‚000‚000 can you make a profit from triangular arbitrage? Mt fuji bank ¥ 92.00/$ Mt rushmore bank SF 1.02/$ Mt blanc bank ¥ 90.00/SF SF TO ¥ $ TO ¥ ¥ to SF 12‚000‚000/1.02 = 11‚764‚705.8824 * 92 = 1‚082‚352‚941.1765 / 90 = 12‚026‚143.7908 ANSWER: profit of 26‚143.791 12. Citibank NYC 0.7551 and .7561/€ Barclays London 0.7545 and .7575/€ 1 million georgraphic arbitrage profit with 2 different exchange quotes. ANSWER
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spread is SGD1.1832-SGD1.1854. 10. Doug Bernard specializes in cross-rate arbitrage. He notices the following quotes: Swiss franc/dollar = SFr1.5971?$ Australian dollar/U.S. dollar = A$1.8215/$ Australian dollar/Swiss franc = A$1.1440/SFr Ignoring transaction costs‚ does Doug Bernard have an arbitrage opportunity based on these quotes? If there is an arbitrage opportunity‚ what steps would he take to make an arbitrage profit‚ and how would he profit if he has $1‚000‚000 available for this
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CHAPTERS 1-5 PROBLEMS You are only required to complete the questions highlighted in yellow. You may work in a group of up to 3 people. One assignment should be turned in with everyone’s name on it. A hardcopy is required at the beginning of class. It must include a cover sheet. It must be completed in Word or the equivalent and stapled. Loose sheets will not be accepted. An electronic submission (email) is required by the beginning of class on the due date. Grades will be posted on Blackboard
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Homework Chapter 3 Questions 1. Utah Bank’s bid price for Canadian dollars is $.7938 and its ask price is $.81. What is the bid/ask percentage spread? 2. Of what use is a forward contract to an MNC? 3. If a euro is worth $.80‚ what is the value of a dollar in euros? 4. What is the function of the Eurocurrency market? 5. Why do interest rates vary among countries? Why are interest rates similar for those European countries that use the euro as their currency? Small Business Dilemma Use
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exchange rate is $0.009346/¥1.00‚ and the Euro to Yen spot exchange rate is €0.006501/¥1.00. Determine the triangular arbitrage profit that is possible if you have $8‚000‚000. 6. The Dollar to Swiss Franc spot exchange rate is $0.8918/SF1.00‚ the Dollar to Pound spot exchange rate is $1.6302/£1.00‚ and the SF to Pound spot exchange rate is SF1.7914/£1.00. Determine the triangular arbitrage profit that is possible if you have $8‚000‚000. 7. The current spot exchange rate is $2.0507/£ and the three-month
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Virtual Organization Strategy Paper Kathy Kudler founded Kudler Fine Food. She was once the VP of marketing for a large defense contractor. Weary of the constant travel and the pressures of corporate life‚ Kathy was looking for other opportunities. As it happened‚ Kathy relieved her stress through gourmet cooking and on a shopping trip for ingredients for a gourmet meal. Kathy suddenly realized there was an opportunity for an upscale epicurean food shop in La Jolla. Kathy developed a business
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Corporate MBA - FINANCE 6644: Global Financial Strategy August 2012 Final Exam Review Questions Instructions A. Please be concise and precise in your answers. B. Practice answers for closed book‚ class room setting. C. Suggested length: minimum one page [1.5 spacing]; maximum two pages per question. D. You would answer 3 questions and 2 Problems in two hours in final exam. Questions 1. Ethical Standards
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