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MOMO stocks are traded in China dna the US as an ADR. In closing of Wednesday, December 4th, 2019, MOMO Adr shares are selling for
MOMO stocks are traded in China dna the US as an ADR. In closing of Wednesday, December 4th, 2019, MOMO Adr shares are selling for $36.52 a share. Each ADR shares represents 10 shares of stock traded in China. Suppose the stock price for each original shares of MOMO in China is 25.68 RMB
A. If you have access to $10,000,000 USD, show how much you can make an arbitrage profit in these two markets given that the exchange rate was 6.98 RMB per USD on that day.
B. Why it might not be possible to make as much in carry out such arbitrage?
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