Problem regarding the adr arbitrage

Assignment Help Business Management

Reference no: EM131021162

ADR Arbitrage

China Telecom Corp. is simultaneously listed on Hong Kong Stock Exchange (HKSE) and New York Stock Exchange (NYSE). It trades as an ORD on the HKSE and as an ADR on the NYSE. The ordinary share (ORD) price of China Telecom is HKD 4 on HKSE. The spot rate is HKD7.75/USD. The depository bank charges a depository fee of 10 cents per ADR.

(a) Please find the symbol ofChina Telecom Corp on NYSE, the ADR ratio, the ADR program, and the depositary bank.

(b) If the price of the ADR is $52 on NYSE, is there an arbitrage opportunity? If your answer is yes, how do you design the arbitrage strategy and how much is your profit?

(c) If the price of the ADR is $51 on NYSE, is there an arbitrage opportunity? If your answer is yes, how do you design the arbitrage strategy and how much is your profit?

Reference no: EM131021162

Questions Cloud

Why does a dna strand grow only in the 5''to 3'' direction : Why does a DNA strand grow only in the 5'to 3' direction?

Ethylene and polyethylene is true : Which of the following statements about ethylene and polyethylene is true?

What is the standard deviation of the portfolio : Security F has an expected return of 10 percent and a standard deviation of 26 percent per year. Security G has an expected return of 17 percent and a standard deviation of 58 percent per year. We form a portfolio composed of 30 percent of security F..

Write the equation for the straight line : Write the equation for the straight line that passes though the origin and the point (2, 4). In your answer show the work you did to find this equation. Then graph this equation. In your equation, what is the value of the slope of the equation and..

Problem regarding the adr arbitrage : China Telecom Corp. is simultaneously listed on Hong Kong Stock Exchange (HKSE) and New York Stock Exchange (NYSE). It trades as an ORD on the HKSE and as an ADR on the NYSE. The ordinary share (ORD) price of China Telecom is HKD 4 on HKSE. The sp..

A mass number of 127 : Tin (Sn), with a mass number of 127 and an atomic number of 50, decays by beta emission. Identify the product of the nuclear reaction by providing its atomic symbol (2 points), mass number (2 points), and atomic number

Calculate the cost to the bakery : Calculate the cost to the bakery if it takes delivery?

Determine the sources of credit available : Determine the sources of credit available (where can you get credit, advantages and disadvantages of the types). - Identify the types of credit that you will use as you develop your budget and financial plan (what types and why).

What mass of kno3 would have to be decomposed : What mass of KNO3 would have to be decomposed to produce 21.1 L of oxygen measured at STP? 2KNO3---> 2KNO2 +O2

User Account

All Pages