Triangular arbitrage profit

Assignment Help Finance Basics

Reference no: EM1333368

Assume you are 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. You learn that UBS is making a direct market between the Swiss franc and the euro, with a current ?/SF quote of 0.6395. Show how you can make a triangular arbitrage profit by trading at these prices. (Ignore bid-ask spreads for this problem.) Assume you have $5,000,000 with which to conduct the arbitrage. What happens if you initially sell dollars for Swiss francs? What ?/SF price will eliminate triangular arbitrage?

Reference no: EM1333368

Questions Cloud

Civil rights movement : How the civil rights movement has contributed to anti-discrimination efforts and the establishment of hate crime legislation and policy.

Note down a code to add two rows of data to the table : Write down a code to add two rows of data to the table that was created using the command above. Ensure the default option on the LAST_DATE column is used in the second row added. Also, issue a command to permanently save the data to the table.

Factors which affecting portfolio returns : As a manager of a large, broadly diversified portfolio of stocks and bonds you realized that changes in certain microeconomic variables might directly affect the performance of your portfolio.

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.

User Account

All Pages