Question
Assume the following information for a bank quoting on spot exchange rates: SUSD/SGD = USD 0.60 per SGD SUSD/GBP = USD 1.5 per GBP SSGD/GBP
Assume the following information for a bank quoting on spot exchange rates:
SUSD/SGD = USD 0.60 per SGD
SUSD/GBP = USD 1.5 per GBP
SSGD/GBP = SGD 2.6 over GBP
Based on the information given, what is the arbitrage profit if you start the arbitrage with USD 1,000? Explicitly mention the strategy (what you are buying and selling) and the associated cash flows with the resulting arbitrage profit, if any. There are no transaction costs.
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Financial Markets And Institutions An Introduction To Risk Management Approach
Authors: Anthony Saunders, Marcia Cornett
3rd Edition
0073250937, 9780073250939
