Course Home FIN 3350 61 Homework Assignment 4 Chapter 5 Sco

Course Home FIN 3350 -61 Homework: Assignment 4 - Chapter 5 Score: 1.26 of 7 pts 12 of 12 (12 complete)HW Score: 68.89 ) Problem 5-10 (book/static) EQuestion Swissie Triangular Arbitrage. The following exchange rates are available to you. (You can buy the stated rates.) Assume you have an initial SF12,000,000. Can you make a profit via triangulara If so, show the steps and calculate the amount of profit in Swiss francs (Swissies) Mt Fuji Bank Mt Rushmore Bank Mt. Blanc Bank Y92.00/$ SF1.02/$ Y90.00/SF Calculate the first arbitrage opportunity attempt below. (Round to the nearest cent) Try Number 1: Start with SF to S Step 1:SF to $ Step 2 $ to yen Step 3: yen to SF $ 11,764,705.88 * 1,082,352,941.00 SF 1,202,614,379

Solution

step 3 : 12,026,143.79        [1,082,352,941 / 90]

Gain on arbitrage = 12,026,143.79 - 12,000,000 = 26,143.79