DBS Bank in Singapore and Malayan Banking Berhad (MBB) in Malaysia give quotes for Malaysian ringgit...
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DBS Bank in Singapore and Malayan Banking Berhad (MBB) in Malaysia give quotes for Malaysian ringgit (MYR), Singapore dollar (SGD) and Thai baht (THB) as follow: In Singapore at DBS: Bid Ask Spot exchange rate for MYR 0.320 SGD 0.325 SGD Spot exchange rate for THB 0.039 SGD 0.042 SGD In Malaysia at MBB: Spot exchange rate for SGD Bid Ask 3.147 MYR 3.159 MYR Spot exchange rate for THB 0.125 MYR 0.133 MYR Assume that you have 10,000 SGD. Is there an arbitrage opportunity? If so, explain clearly the order of the transactions that you would execute, and the SGD profit that you would earn, accurate to the nearest cent. If you cannot earn a profit from arbitrage, explain why. (22 marks) DBS Bank in Singapore and Malayan Banking Berhad (MBB) in Malaysia give quotes for Malaysian ringgit (MYR), Singapore dollar (SGD) and Thai baht (THB) as follow: In Singapore at DBS: Bid Ask Spot exchange rate for MYR 0.320 SGD 0.325 SGD Spot exchange rate for THB 0.039 SGD 0.042 SGD In Malaysia at MBB: Spot exchange rate for SGD Bid Ask 3.147 MYR 3.159 MYR Spot exchange rate for THB 0.125 MYR 0.133 MYR Assume that you have 10,000 SGD. Is there an arbitrage opportunity? If so, explain clearly the order of the transactions that you would execute, and the SGD profit that you would earn, accurate to the nearest cent. If you cannot earn a profit from arbitrage, explain why. (22 marks)
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