80.2K

Verified Solution

Link Copied!

1. The table below presents hid-ask quotes for Euro (EUR) from several currency dealers around the world Currency Dealer in London Hong Kong Zurich New York Bid Ask Quotes for EUR 51.3454-60 $i 3450-61 $1.3462-65 $1.3459-66 In order to take advantage of locational arbitrage, a currency speculator should buy EUR from the dealer and sell EUR to the dealer a Zurich: Hong Kong: b. Hong Kong: New York c. New York, Hong Kong d. London, Zurich 2. The table below presents bid ask quotes for Euro (EUR) from several currency dealers around the world Currency Dealer in London Hong Kong Zurich New York Bid/Ask Quotes for EUR $1.3454-60 $1.3450-61 $1.3462-65 $1.3459-66 The maximum profit a currency speculator, with access to $2,500,000, can make in one round trip locational arbitrage transaction is $ a. 500 b. 243 856 d. 371 3. The table below presents bid-ask quotes for Euro (EUR) from several currency dealers around the world Currency Dealer in London Hong Kong Zurich New York Bid/Ask Quotes for EUR $1.3454-60 $1.3450-61 S1.3462-65 $1.3459-66 dealer Based on the quotes below, as all traders use locational arbitrage to maximize profits, ask quote of the will and bid quote of the dealer will & Zurich; increase: London: increase, b. London, increase; Zurich; decrease c. New York, increase, Hong Kong: decease; d. Hong Kong: increase; New York; decrease; 4. The table below presents quotes and cross-quotes on BP and SF Price for BP in New Price for SF in Price for BP in London York (in ) Chicago (in ) (in SF) $ 1.725 for 1 BP $ 0.645 for 1 SF SF 2.75 for 1 BP second step The three steps which will create triangular arbitrage profit are as follows: first step, convert convert and third step, convert a. S to BP: BP to SF; SF to S b. Sto SF SF to BP; BP to $ c. $ to BP, SF to BP, SF to S d. Sto SF; BP to SF: BP to S

Answer & Explanation Solved by verified expert

See Answer