Question
Remy has observed different exchange rates located in Melbourne and Adelaide. The bank in Melbourne offers the bid-ask rate for a US dollar at AUD1.213-1.2774
Remy has observed different exchange rates located in Melbourne and Adelaide. The bank in Melbourne offers the bid-ask rate for a US dollar at AUD1.213-1.2774 whereas the bid-ask rate for a US dollar in Adelaide is AUD1.0714-1.1904. If Remy has 310,000 Australian dollars, how much profit can he make from the price differentials?
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Step: 1
Remy can potentially make a profit by exploiting the price differential between the buying and selli...
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Financial Institutions Management A Risk Management Approach
Authors: Marcia Cornett, Patricia McGraw, Anthony Saunders
8th edition
978-0078034800, 78034809, 978-0071051590
