A New York Bank quotes for the bid rate for pound at $1.4360 and the ask rate at $1.4370 and a London Bank quotes for the bid rate for the pound at $1.4202 and the ask rate is $ 1.4325. An arbitrager has working capital of $1,000,000. How much would the arbitrager have if the arbitrager carried out a locational arbitrage?

International Financial Management
14th Edition
ISBN:9780357130698
Author:Madura
Publisher:Madura
Chapter7: International Arbitrage And Interest Rate Parity
Section: Chapter Questions
Problem 1BIC
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A New York Bank quotes for the bid rate for pound at $1.4360 and the ask rate at $1.4370
and a London Bank quotes for the bid rate for the pound at $1.4202 and the ask rate is $
1.4325. An arbitrager has working capital of $1,000,000. How much would the arbitrager
have if the arbitrager carried out a locational arbitrage?
Transcribed Image Text:A New York Bank quotes for the bid rate for pound at $1.4360 and the ask rate at $1.4370 and a London Bank quotes for the bid rate for the pound at $1.4202 and the ask rate is $ 1.4325. An arbitrager has working capital of $1,000,000. How much would the arbitrager have if the arbitrager carried out a locational arbitrage?
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