A foreign exchange trader working out of Berlin with operations in Chicago simultaneously calls Citibank in Chicago
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Question:
A foreign exchange trader working out of Berlin with operations in Chicago simultaneously calls Citibank in Chicago and Lloyds Bank in London. The banks give the following quotes on the euro simultaneously.
Citibank Chicago Lloyds Bank London $1.2624-25/ $1.2621-22/
- a)Is there an arbitrage opportunity? If yes, show the steps the trader needs to take to make an arbitrage profit with $5,000,000 available in his bank account.
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