4. You observe the following quotes for the USD/AUD in the spot market from two banks:...

 

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4. You observe the following quotes for the USD/AUD in the spot market from two banks: Bank of Sydney Bid Bank of New York Ask 0.71715 Ask Bid 0.71708 0.71711 0.71715 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? (5 marks) (b) You observe the following quotes for the GBP /AUD in the spot market from two banks: Bank of Melbourne Ask Bank of London Ask 0.5515 Bid Bid 0.5458 0.5459 0.5514 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? (5 marks) c) You observe the following quotes for the EUR/ USD in the spot market from two banks: Deutsche Bank Bank of America Bid Bid Ask Ask 1.18102 1.18102 1.18094 1.18100 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 EUR 500,000. If not, explain why arbitrage is not possible? (5 marks) 4. You observe the following quotes for the USD/AUD in the spot market from two banks: Bank of Sydney Bid Bank of New York Ask 0.71715 Ask Bid 0.71708 0.71711 0.71715 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? (5 marks) (b) You observe the following quotes for the GBP /AUD in the spot market from two banks: Bank of Melbourne Ask Bank of London Ask 0.5515 Bid Bid 0.5458 0.5459 0.5514 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? (5 marks) c) You observe the following quotes for the EUR/ USD in the spot market from two banks: Deutsche Bank Bank of America Bid Bid Ask Ask 1.18102 1.18102 1.18094 1.18100 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 EUR 500,000. If not, explain why arbitrage is not possible? (5 marks)

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4 cas e it we byy from Bank of sydney Sell info Banis oF NeW NO Arb... View the full answer