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Category > Business & Finance Posted 11 May 2017 My Price 7.00

A corporate treasury working out of Austria with operations in New York

9. A corporate treasury working out of Austria with operations in New York, simultaneously calls Citibank in New York City and Barclays in London. The banks give the following quotes on the euro simultaneously.

Citibank NYC

Barclays London

$0.8464-74/Ac‚¬

$0.8437-57/Ac‚¬

a. Using $1 million (or its euro equivalent), show how the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes. b. Suppose the banks update their quotes to the following:

Citibank NYC

Barclays London

$0.8454-71/Ac‚¬

$0.8440-62/Ac‚¬

Is there still an arbitrage opportunity? Why or why not?

 

 

Answers

Alpha Geek
(8)
Status NEW Posted 11 May 2017 09:05 AM My Price 7.00

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file 1494493829-Answer.docx preview (168 words )
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