Question
Dibakar Poha, an International Finance student from University Sabah, is looking for opportunities in the foreign exchange market with an initial investment amount of SGD
Dibakar Poha, an International Finance student from University Sabah, is looking for opportunities in the foreign exchange market with an initial investment amount of SGD 3000. Keeping his eyes glued to his Eikon screen until the wee small hours, where he spots the following quotes: Interest Rates GBP 5.25% THB 3.25% AUD 8.25% SGD 7.25% 180-day Forward Rate AUD/GBP 1.615 THB/GBP 97.96 AUD/SGD 2.265 THB/SGD 146.93 Spot Rate AUD/GBP 1.59 THB/GBP 100 AUD/SGD 2.25 THB/SGD 150 Required: You are expected to calculate the arbitrage opportunities that can be undertaken by Mr Poha, based on (1) direct exchange possibilities and (2) the sum at hand from the above-mentioned information. Furthermore, please comment on the most profitable arbitrage opportunity based on the above-mentioned calculations.
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