Reference no: EM131063335
1. Assume the following information:
Quoted Price
Value of Canadian dollar in U.S. dollars $.95
Value of Singapor dollar in U.S. dollars $.40
Value of Canadian dollar in Singapore dollars S$2.35
Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of triangular arbitrage?
2. Assume the following information:
Spot rate of Euro = $1.25
180-day forward rate of Euro = $1.27
180-day Euro interest rate (annual) = 6%
180-day U.S. interest rate (annual) = 5%
Given this information, is covered interest arbitrage worthwhile for US investors? Assume that you have $1,000,000 to use for this purpose. Show all steps of calculations. Explain your answer.
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Statements is correct concerning discount bonds
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Eliminate any further possibilities of triangular arbitrage
: Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any furthe..
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