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Intro You have $10,000 and observe the following exchange rates. Bid Ask Exchange rate Value of euro in U.S. dollars $1.03 $1.04 $0.99 $1 Value
Intro You have $10,000 and observe the following exchange rates. Bid Ask Exchange rate Value of euro in U.S. dollars $1.03 $1.04 $0.99 $1 Value of Swiss franc in U.S. dollars Value of euro in Swiss francs CHF0.99 CHF1 Part 1 Attempt 1/5 for 10 pts. Is there an arbitrage opportunity? If so, what should you do to exploit it? . Yes, buy euros with Swiss francs Yes buy Swiss francs with euros Correct Value of euro in Swiss franc Value of curo in $ Value of Swiss franc in $ $1.047 ($17 CHF = CHF 1.0411 Since the quoted cross exchange rate is lower than this calculated rate the nunte Correct Value of euro in Swiss franc Value of euro in $ Value of Swiss franc in $ $1.04 / $1 /CHF CHF1.041/6 Since the quoted cross exchange rate is lower than this calculated rate, the quote is cheap: you should buy euros with Swiss francs. Part 2 - Attempt 1/10 for 10 pts. What is your profit from exploiting the opportunity once (in $)? 0+ decimals Submit
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