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. BCE trades both in Toronto and in New York. The bid and ask quotes for...

. BCE trades both in Toronto and in New York. The bid and ask quotes for BCE in Toronto are 55.37 and 55.60. The bid and ask quotes on the NYSE are 41.89 and 42. The CAD-USD quotes are 1.318 and 1.319. Is there an arbitrage opportunity here?

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Answer #1

Quote in Toronto (Canada) CAD 55.37 - 55.60

Quote in New York (US) USD 41.89 - 42.00

Exchange Rate , USD 1 = CAD 1.318 - 1.319

Option 1 - Purchase in US and Sell in Canada

Total outflow in Purchase = USD 42

Total Inflow in sale = CAD 55.37

Equivalent USD = 55.37 / 1.319 = $ 41.98

Result is loss of $ 0.02

Option 2 - Purchase in Canada and Sell in US

Total outflow in Purchase = CAD 55.60

Total Inflow in Sale = USD 41.89

Equivalent CAD = 41.89 × 1.318 = CAD 55.21

Result is loss

Hence Arbitrage opportunity is not available.

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