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Can a swiss investor earn a guaranteed profit

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Reference no: EM13909969

Suppose cross rate arbitrage investors notice the following quotes:

Swiss franc/U.S. dollar =1.5971
Australian dollar/U.S. dollar =1.8215
Australian dollar/Swiss franc =1.1450

1. Ignoring transaction cost does a U.S. investor have an opportunity to earn a guaranteed profit? What actions would he have to take and what is his profit if any. He has $1,000,000 to invest.

2. Can a Swiss investor earn a guaranteed profit? What actions would he take and how much would be his profit. He has SF 1,597,100 to invest.

3. What SF/$ price will eliminate triangular arbitrage opportunity for a Australian investor?

Reference no: EM13909969

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