Question

Transatlantic Arbitrage. A corporate treasury working out of Vienna with operations in New York simultaneously calls...

Transatlantic Arbitrage. A corporate treasury working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London. The banks give the following quotes on the euro simultaneously.

Citibank NYC

Barclays London

$0.7551−61=€1.00

$0.7545−75=€1.00

Using

$1

million or its euro​ equivalent, show how the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes.

Calculate the first arbitrage opportunity​ below:  ​(Round to the nearest​ cent.)

Arbitrage Strategy #1

Initial investment

$

1,000,000.00

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