Shava specializes in cross-rate arbitrage. He notices the following quotes: Swiss franc/dollar = SFr1.5987/$ Australian dollar/U.S. dollar = A$1.8233/$ Australian dollar/Swiss franc = A$1.1452/SFr Ignoring transaction costs, does Shava 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 much would he profit if he has $1,000,000 available for this purpose

Shava specializes in cross-rate arbitrage. He notices the following quotes: Swiss franc/dollar = SFr1.5987/$ Australian dollar/U.S. dollar = A$1.8233/$ Australian dollar/Swiss franc = A$1.1452/SFr Ignoring transaction costs, does Shava 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 much would he profit if he has $1,000,000 available for this purpose

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter18: Long-term Debt Financing

Section: Chapter Questions

Problem 2SBD

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Doug Bernard specializes in cross-rate arbitrage. He notices the following quotes: Swiss franc/dollar = SFr1.6077/$ Australian dollar/U.S. dollar = A$1.8345/$ Australian dollar/Swiss franc = A$1.1521/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 much would he profit if he has $1,000,000 available for this purpose?
Doug Bernard specializes in cross-rate arbitrage. He notices the following quotes: Swiss franc/dollar = SFr1.5971/$ 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 much would he profit if he has $1,000,000 available for this purpose? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Arbitrage profit
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Peter Sheffield has Euros (€) amounting to €500,000 and is provided with the following quotes: Bank A: Euro/US dollar = €0.8418/$ Bank A: British pound /US dollar = £0.7538/S Bank B: British pound/Euro = £0.8863/€ Determine whether an arbitrage opportunity exists. Show your calculation in the space below and briefly explain (in one or two sentences) why the arbitrage opportunity exists or not. For example, show your calculation as follows (The currencies used in the example are not applicable to your calculation. It just provide you with information how you should show your calculation): Yen/ZAR = 11.7654/1.3954 = 8.4316 (Round your answer to 4 decimals) Reason why arbitrage opportunity exists/ does not exist:
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Ali is specialized in Cross-rate arbitrage. He notices the below quotes: CHF1.5971 = 1USD; AUD1.8215 = 1USD; AUD1.1440 = 1CHF. By ignoring transaction cost. Does Ali have an arbitrage opportunity on these quotes?In case of any arbitrage opportunity, what steps has to be taken to achieved, if he has USD1,000,000 available for this purpose.
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If the firm ,NAB economists,had exposures in currencies such as Brazilian Real or Indonesian Rupiah,what options does the firm have in terms of hedging/foreign exchange risk management