Describing arbitrage opportunity

Reference no: EM1333365

On the Milan boards, Fiat stock closed at EUR5.84 per share on Thursday, March 3, 2005. Fiat trades as an ADR on the NYSE. One underlying Fiat share equals one ADR. On March 3, the S/EUR spot exchange rate was $1.3112/EUR1.00. If Fiat ADR's were trading at $7 when the underlying shares were trading in Milan at EUR5.84, what could you do to earn a trading profit? Assume transaction costs are negligible.

Reference no: EM1333365

Questions Cloud

Review of the literature : During your review of the literature, you find that many others have studied your topic, will this tend to bolster your confidence that your topic is worth studying?

Triangular arbitrage profit : Suppose you're a trader with Deutsche Bank. From the quote screen on your computer terminal, you notice that Dresdner Bank is quoting ?0.7627/$1.00 and Credit Suisse is offering SF1.1806/$1.00.

Computing monthly breakeven sales : Determine the monthly breakeven sales in dollars before adding nachos.

Evaluating internal resources and capabilities : Evaluating internal resources and capabilities and then searching for industries in which they can be exploited?

Describing arbitrage opportunity : On the Milan boards, Fiat stock closed at EUR5.84 per share on Thursday, March 3, 2005. Fiat trades as an ADR on the NYSE. One underlying Fiat share equals one ADR.

Antitrust laws violated by memorial : Discuss any possible anti-trust laws that Memorial may have violated. Also, discuss any defenses that Memorial can establish to an anti-trust action.

Discuss three ways resources : Discuss three ways resources become more valuable.

Financial institution role in financial matters for business : What role(s) do financial institutions play in financial matters for businesses?

Which process is the best choice : In SQL Server, multiple WHERE statements can accomplish almost everything that a UNION can. TRUE OR FALSE. Justify your reply . This question is not asking that method is the best choice or the more efficient. It is simply asking is it possible.

User Account

All Pages