Question
I was able to calculate (a) but I am having trouble with the calculations of (b). Thanks! The following are New York closing rates for
I was able to calculate (a) but I am having trouble with the calculations of (b). Thanks!
The following are New York closing rates for A$/US$ and $/:
A$/$ = 1.5150; $/ = $1.2950
(a) Calculate the cross rate for in terms of A$ (A$/).
(b) If is trading at A$1.95/ in London (cross market) on the same day, is there an arbitrage opportunity? If so, show how arbitrageurs with could profit from this opportunity and calculate the arbitrage profits in and in percent.
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
5th Edition
0078034663, 978-0078034664
