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Consider the following Bid Ask quotes for the USD/AUD currency pair in New York and Sydney spot markets: New York Quote : A$ 1.3341 1.3371
Consider the following Bid Ask quotes for the USD/AUD currency pair in New York and Sydney spot markets:
New York Quote : A$ 1.3341 1.3371 / US$
Sydney Quote : A$ 1.3378 1.3401 / US$
- Is there an arbitrage opportunity in the spot markets from buying the US$ at a low price in one market and selling it back (immediately before the prices change) at a higher price in the other market?
- IF YES, indicate the markets and the prices at which the arbitrager would buy and sell the US$ and calculate the profits if an arbitrager in Sydney had access to A$ 5,000,000 for A$ - US$ arbitrage.
- IF NO, explain WHY NOT?
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