Question 4

The following spot rates are observed in New York Forex market: GBP/USD 1.3830/50 CHF/USD 1.0810/45 GBP/CHF 1.2550/85 Is there an arbitrage opportunity? What transaction have to executed to it, if there is? Support our answer with arbitrage profits/loss if you have $1,000,000.

Question 5

The following spot rates are observed in forex market- GBP/EUR: 3.5250/55 GBP/JPY: 180.80/181.30 a) What do you expect the EUR/JPY rate to be? b) Suppose that in Frankfurt you get a quote EUR/JPY spot 54.1530/54.2550, is there an arbitrage opportunity? if there is? Support our answer with arbitrage profits/loss if you have GBP1,000,000.

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