Agilex Bio Imports will pay an annual dividend of $2 5 per share and an extra dividend of $0 35 per share at the end of this month The companys stock is currently listed and actively traded on ASX Medi Equipment Ltd is a subsidiary of Agilex Bio Imports It has 275,000 outstanding common shares, a P E ratio of 7 5 and $485,000 net income available for common shareholders The board of directors has just voted a 32 share split You currently own 1,000 shares of this company Required Agilex Bio Imports has extra cash of A$625,000 The AUD CAD exchange rate in Toronto is 0 9254 The CAD AUD rate in Sydney is 1 0912 Is there any arbitrage profit possible Set up an arbitrage scheme with the extra cash What is the potential gain in AUD dollar, disregarding bid ask spread (2 marks) If the market price of the Medi Equipment Ltds share a month after splitting bounced back to the level before splitting, calculate the increase in the total market capitalization of the firm and the total value of your investment (2 marks)

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Posted on Oct 05, 2024

Agilex Bio-Imports will pay an annual dividend of $2.5 per share and an extra dividend of $0.35 per share at the end of this month.

Agilex Bio-Imports will pay an annual dividend of $2.5 per share and an extra dividend of $0.35 per share at the end of this month. The companys stock is currently listed and actively traded on ASX.

Medi Equipment. Ltd is a subsidiary of Agilex Bio-Imports. It has 275,000 outstanding common shares, a P/E ratio of 7.5 and $485,000 net income available for common shareholders. The board of directors has just voted a 32 share split. You currently own 1,000 shares of this company.

Required:

Agilex Bio-Imports has extra cash of A$625,000. The AUD/CAD exchange rate in Toronto is 0.9254. The CAD/AUD rate in Sydney is 1.0912. Is there any arbitrage profit possible? Set up an arbitrage scheme with the extra cash. What is the potential gain in AUD dollar, disregarding bid-ask spread? (2 marks)
If the market price of the Medi Equipment. Ltds share a month after splitting bounced back to the level before splitting, calculate the increase in the total market capitalization of the firm and the total value of your investment. (2 marks)