Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Inspired by his recent trip to the Great Pyramids, Bancorp trader Ruminder Dhillon wonders if he can make an Intermarket arbitrage profit using Libyan dinars and Saudi riyals. He has $1,000,000 to work with so he gathers the following quotes:
| Bancorp quotes U.S. dollar per Libyan dinar: | USD1.9324 = LYD1.00 |
| National Bank of Kuwait quotes Saudi riyal per Libyan dinar: | SAR 1.9405 = LYD1.00 |
| Barclay quotes U.S. dollar per Saudi riyal: | USD0.2667 = SAR1.00 |
Step 1
1) Different i for Base rate -Quote rate =
2) Different between Spot and Forward =
(1) + (2) =
invest in _ borrow in _
Step 2 explain using table
Transcribed Image Text:2 Second step
spot
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