Question

You are given the following exchange rate data:                         Canadian Dollar:    CAD 1.1280/USD   &nbs

You are given the following exchange rate data:

                        Canadian Dollar:    CAD 1.1280/USD

                          British Pound:        USD 1.8840/GBP

                                               

(a) How many Canadian Dollars can be purchased with 1 British Pound?

(b) If you learn that the cross rate quoted by the Bank is actually CAD 2.1280/GBP, what would be your triangular arbitrage profits if you could put USD $1,000,000 into this arbitrage? To get full credits, you need to include step by step instructions on how to carry out this strategy.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as...
You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.20 = €1.00 and the dollar-pound exchange rate is quoted at $1.80 = £1.00. If a bank quotes you a cross rate of £1.00 = €1.50 how much money can you make via triangular arbitrage (in terms of dollars)? • 1,160,000 • 0 • 500,000 • 250,000 Can you tell me if my math is correct? Answer is 0 Steps: Convert USD 1,000,000 to...
Assume the following information: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate...
Assume the following information: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate of pound in USD = 1.45 USD/GBP Exchange rate of pound in Singapore dollars = 4.88 SGD/GBP If you have 1 million USD to conduct one cycle of triangular arbitrage, what will be your profit?
Assume the following information: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate...
Assume the following information: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate of pound in USD = 1.49 USD/GBP Exchange rate of pound in Singapore dollars = 4.8 SGD/GBP If you have 1 million USD to conduct one cycle of triangular arbitrage, what will be your profit?
Use the following information to answer this question. The Indian rupee to US dollar exchange rate...
Use the following information to answer this question. The Indian rupee to US dollar exchange rate is quoted at Bank A as INR 74 =1 USD. The Canadian dollar (CAD) to US dollar exchange rate is quoted at Bank B as CAD 1.3 = 1 USD. You learn that Bank C is making a direct market between the Indian rupee and the Canadian dollar INR/CAD quote of 56 INR = 1 CAD. How much profit can an astute trader with...
You believe that the US dollar (USD) will fall in value against the Canadian Dollar (CAD)....
You believe that the US dollar (USD) will fall in value against the Canadian Dollar (CAD). Your best strategy is to... A. Borrow in CAD, exchange your CAD for USD, put your USD in a US bank until the dollar depreciates and finally, exchange your USD for CAD and repay your CAD loan. B. Write a call option on the US Dollar C. Buy a call option on the Canadian Dollar D. Buy a put option on the US Dollar...
Three Exchange Rates are as follows: 1) US Dollars (USD) to Canadian Dollars (CAD) at CAD...
Three Exchange Rates are as follows: 1) US Dollars (USD) to Canadian Dollars (CAD) at CAD 1 to USD 1.05 2) CAD to Euros (EUR) at CAD 1.41 to EUR 1 3) EUR to USD at EUR 0.72 to USD 1 Suppose you start with USD 100,000, and do one round of "triangular arbitrage", that is convert make a total of 3 foreign exchange transactions to start from USD and return to USD. What will be your profit in USD?
You believe that the US dollar (USD) will fall in value against the Canadian Dollar (CAD)....
You believe that the US dollar (USD) will fall in value against the Canadian Dollar (CAD). Your best strategy is to... A. Borrow in CAD, exchange your CAD for USD, put your USD in a US bank until the dollar depreciates and finally, exchange your USD for CAD and repay your CAD loan. B. Write a call option on the US Dollar C. Buy a call option on the Canadian Dollar D. Buy a put option on the US Dollar...
Part II: Triangular Arbitrage The quotations of exchange rates of US dollars, British pound, and the...
Part II: Triangular Arbitrage The quotations of exchange rates of US dollars, British pound, and the New Zealand dollar in National Bank is as below. ​ Quoted Bid Price Quoted Ask Price USD/GBP 0.65 0.66 NZD/USD 0.50 0.52 GBP/NZD ​2.72 ​2.75 Is the triangular arbitrage feasible? If yes, how much is the triangular arbitrage profit when you have $500,000 to invest. If no, please explain why
Part II: Triangular Arbitrage The quotations of exchange rates of US dollars, British pound, and the...
Part II: Triangular Arbitrage The quotations of exchange rates of US dollars, British pound, and the New Zealand dollar in National Bank is as below. ​ Quoted Bid Price Quoted Ask Price USD/GBP 0.65 0.66 NZD/USD 0.50 0.52 GBP/NZD ​2.72 ​2.75 Is the triangular arbitrage feasible? If yes, how much is the triangular arbitrage profit when you have $500,000 to invest. If no, please explain why (20 points)
Japanese Yen to Canadian Dollar 78.87 JPY/CAD United States Dollar to Euro 1.16 USD/EUR Swiss Franc...
Japanese Yen to Canadian Dollar 78.87 JPY/CAD United States Dollar to Euro 1.16 USD/EUR Swiss Franc to Canadian Dollar 0.69 CHF/CAD Swiss Franc to Euro 1.08 CHF/EUR. Determine the implied USD/JPY cross rate. (2 POINTS) Suppose that the JPY to USD exchange rate is 111 JPY/1 USD. Is there any arbitrage opportunity? Explain in words why you think that is the case. (2 POINTS) Assume you have 520 JPY. What is your profit in JPY, (show your calculations)? (2 POINTS)