Geographical Arbitrage Sums
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(1)Â Â Bank AÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â GBP USDÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1.6920Â Â Â Â Â Â Â Â Â Â Â Â 1.6940
Bank BÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â GBP USDÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1.6880Â Â Â Â Â Â Â Â Â Â Â Â 1.6900
Calculate Arbitrage, if any.
(Ans.: 1,183)
(2)Â Â Bank XÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â EUR CHFÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 1.4790Â Â Â Â Â Â Â Â Â Â Â Â 1.4820
Bank YÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â CHF EURÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 0.6700Â Â Â Â Â Â Â Â Â Â Â Â 0.6720
Calculate Arbitrage, if any.
(Ans.: 4,113)
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(3)  City Bank             CAD AUD                0.9530            0.9550
Barclays               CHF EUR                  1.0500            1.0520
Calculate Arbitrage, if any.
(Ans.: 650)
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(4)Â Â HSBCÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â USD INRÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 50.00Â Â Â Â Â Â Â Â Â Â Â Â Â Â 50.20
SBIÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 100 INR USDÂ Â Â Â Â Â Â Â Â Â Â Â Â 2.01Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 2.02
Calculate Arbitrage, if any.
(Ans.: 5,000)
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(5)  SBI offers                        USD INR                               52
Amex Bank offers                     100 INR USD                        1.9279
Calculate Arbitrage, if any.
(Ans.: 2,508)
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(6)Â Â Standard Chartered offers 1 Euro = Pound 0.80 in Spot Market. HSBC just reciprocates the same rate to quote 1 Pound in terms of Euro; by inversing it.
(i)Â Â Â Â Â Â Â Â Â Â Calculate the rate quoted by HSBC
(ii)Â Â Â Â Â Â Â Â As per forex dealer of Standard Chartered; Euro is at 2% premium per annum. What will be rate for 1 Euro after 1 year as per Standard Chartered?
(iii)Â Â Â Â Â Â As per forex dealer of HSBC; Pound is at 2% discount per annum. What will be rate for 1 Pound after 1 year as per HSBC?
(iv)Â Â Â Â Â Â Is there any arbitrage possibility on 1 year rates of the two banks? Calculate it for a million of currency amount.
(Ans.: (i) 1.25 (ii) 0.8160 (iii) 1.2250 (iv) 400)
(7)  Chess Bank offers $ 1 = £ 0.625 in Spot Market.
Sakura bank just reciprocates the same rate to quote £ 1 in terms of $; by inversing it.
(i)Â Â Â Â Â Â Â Â Â Â Calculate the rate quoted by Sakura Bank
(ii)Â Â Â Â Â Â Â Â As per forex dealer of Chess Bank; $ will be at 2% premium per annum. What will be rate for $ 1 after 1 year as per Chess Bank?
(iii)      As per forex dealer of Sakura Bank; £ will be at 2% discount per annum. What will be rate for £ 1 after 1 year as per Sakura Bank?
(iv)Â Â Â Â Â Â Is there any arbitrage possibility on 1 year rates of the two banks? Calculate it for a million of currency amount.
(Ans.: (i) 1.60 (ii) 0.6438 (iii) 1.5520 (iv) 900)
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