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please show steps by steps how to solve 4. BOA, a U.S. bank, is quoting a Swiss Franc to U.S. dollar exchange rate of 1.2000
please show steps by steps how to solve
4. BOA, a U.S. bank, is quoting a Swiss Franc to U.S. dollar exchange rate of 1.2000 - 1.2010 SFr/USD. It's also offering a Polish Zloty and U.S. dollar exchange rate of 5.8500 - 5.8510 PLZ/USD. a. Calculate the implied PLZ/SFr bid-ask. b. Let's ignore the bid-ask, and assume BOA is quoting a flat exchange rate of 1.2 Sfr/USD and 5.85 PLZ/USD. TDA, another bank, has an exchange desk quoting 5.5 PLZ/SFr. Suppose you have $1 M, construct a trading strategy to take advantage of the situation and calculate the arbitrage profits Step by Step Solution
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