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1. Week 5 The3monthforwardbidpriceonAugust20fortheEURis1.4622,atthesametimethepriceofIMMEurofuturesfordeliveryonDecember7this1.4403.Howcouldaspeculatororarbitrageurprofitfromthissituation?Whatwillbetheprofitperfuturescontract(sizeis125,000)?Inattemptingtoexploitthis,whatissuesmustbeaddressed? 2. Week 5 Imagine you find the following two quotes available to you from two retail currency dealers, one in Zurich,
1.
Week 5- The3monthforwardbidpriceonAugust20fortheEURis1.4622,atthesametimethepriceofIMMEurofuturesfordeliveryonDecember7this1.4403.Howcouldaspeculatororarbitrageurprofitfromthissituation?Whatwillbetheprofitperfuturescontract(sizeis125,000)?Inattemptingtoexploitthis,whatissuesmustbeaddressed?
- 2.
- Imagine you find the following two quotes available to you from two retail currency dealers, one in Zurich, one in London: GBP / CHF 1.7275 / 1.7990 CHF / GBP 0.5565 / 0.5798 Assuming no additional transaction costs, is there an arbitrage opportunity, and if so what percentage return can you generate?
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