Question: Please Only Answer Section B and C Thanks 4. (a) You observe the following quotes for the USD/AUD in the spot market from two banks:

Please Only Answer Section B and C Thanks

4. (a) You observe the following quotes for the USD/AUD in the spot market from two banks: Bank of Sydney Bank of New York Bid Ask Bid Ask 0.6926 0.6928 0.7030 0.7075 Do these quotes imply the possibility of earning a profit by using locational arbitrage? If so, calculate the potential profit if you are able to use AUD 25,000. If not, explain why arbitrage is not possible?

Please Only Answer Section B and C Thanks

(b) You observe the following quotes for the GBP /AUD in the spot market from two banks: Bank of Melbourne Bank of London Bid Ask Bid Ask 0.5453 0.5458 0.5407 0.5411 Do these quotes imply the possibility of earning a profit by using locational arbitrage? If so, calculate the potential profit if you are able to use GBP 50,000. If not, explain why arbitrage is not possible?

c) You observe the following quotes for the CHF /AUD in the spot market from two banks: Bank of Australia Bank of Switzerland Bid Ask Bid Ask 0.7002 0.7095 0.7054 0.7116 Do these quotes imply the possibility of earning a profit by using locational arbitrage? If so, calculate the potential profit if you are able to use CHF 250,000. If not, explain why arbitrage is not possible?

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