Forces would occur to eliminate arbitrage opportunity

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Reference no: EM132019444

Assume spot FX rates of $1.3754/Euro and $1.6561/BP. What should the cross exchange rate for Euro/BP (Euros per unit of BP)? If the market rate is 1.286Euro/BP, describe the arbitrage strategy. Assume that you have $100,000 to invest, what will be profit of the arbitrage strategy (so your work step by step)? If arbitrage profit exists, what market forces would occur to eliminate the arbitrage opportunity?

Reference no: EM132019444

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