Capture arbitrage profit by trading FM shares

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Reference no: EM131948505

You can trade FM Inc.’s shares for $77 per share in the United States and for £50 in the UK. Assume a brokerage commission of $0.10 per share in the United States and £0.10 in the UK. A foreign exchange dealer quotes a bid price of $1.50 for each pound and offers them for $1.51. Show how can you capture arbitrage profit by trading FM shares.

Reference no: EM131948505

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