The following information is available to a Zambian trader: i. Percentage spread given for Zambian kwacha per US dollar is 0.1%. The ask rate for Zambian kwacha per C$ dollar is K9.526 ii. Canadian dollars per US dollar C$ 1.2780/US$ iii. Kwacha per US dollar K8.524/US$ a) Calculate the bid rate b) Determine if there is any opportunity for arbitration c) Explain How a Zambian trader with K1, 200,000 can use this amount to benefit from the inter market arbitrage? What will be the profit or loss for the trader?
The following information is available to a Zambian trader:
i. Percentage spread given for Zambian kwacha per US dollar is 0.1%. The ask rate for Zambian kwacha per C$ dollar is K9.526
ii. Canadian dollars per US dollar C$ 1.2780/US$
iii. Kwacha per US dollar K8.524/US$
a) Calculate the bid rate
b) Determine if there is any opportunity for arbitration
c) Explain How a Zambian trader with K1, 200,000 can use this amount to benefit from the inter market arbitrage?
What will be the profit or loss for the trader?
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
