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1. Riskless profit on the Swiss franc. The following exchange rates are avaliable to you.(you can buy or ssell at the started rates.)
Mt Fuji Bank ¥120.00/A$
Mt Rushmore Bank SF1.6000/A$
Mt Blanc Bank ¥80.00/SF
Assume that you have an initial SF 10,000,000. Can you make a profit via triangular arbitrage? If so, show steps and calculate the amount of profit in Swiss francs.
2. Australian-euro arbitrage. A corporate treasury with operations in Sydney simultaneously calls Westpac Bank in Sydney and Barclays in London. The two banks give the following quotes at the same time on euro:
Westpac Sydney: A$1.1840-60/€ Barclays London A$1.1830-50/€
Explain, using 1 million or its euro equivalent, how the corporate treasury could make geographical arbitrage profit with the two exchange rate quotes.
Assume that there are two health states and individual can either be sick with the disease or perfectly healthy. The probability of sickness is 0.5. Income of the individual when healthy is $14,000 but the income available for consumption becomes $6,..
Universal Financial, Inc. has total current assets of $1,200,000; long-term debt of $600,000; total current liabilities of $500,000; and long-term assets of $800,000. How much is the firm's net working capital?
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A pure discount (or zero-coupon) government bond is issued today that promises to pay $10,000 in 5 years. If the current interest rate on similar bonds is 6%, what is the price of the bond? Recall that the compounding interval for bonds is 6 months.
The maintenance costs for a certain machine are $1,600.00 per year for the first 6 years and $2,400.00 per year for the next 7 years. At a interest rate of 6% per year, the present worth of the maintenance is closest to? Show work using factors in th..
What would it cost an insurance company to replace a family’s personal property that originally cost $20,000? The replacement costs for the items have increased 20 percent
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