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Use the following information to answer the following 3 questions Direct Market for C$/INR                           Bi

  1. Use the following information to answer the following 3 questions

Direct Market for C$/INR                           Bids                  asks

Deutsche Bank’s quote:                        C$.0855/INR    C$.0865/INR

Barclays’ quote:                                   C$.0857/INR    C$.0864/INR

CSFB’s quote:                                       C$.0860/INR     C$.0871/INR

Markets for INR/$ and C$/$

                                                      dollar bids        dollar asks        CAD bids            CAD asks

Deutsche Bank’s quote:                  INR 13.0/$        INR 13.3/$        $.865/C$          $.871/C$   

Barclays’ quote:                             INR 13.1/$        INR 13.5/$        $.866/C$          $.872/C$

CSFB’s quote:                                 INR 13.2/$        INR 13.35/$      $.867/C$          $.875/C$

  1. What is the best direct C$/INR ask price? Compute the best indirect C$/INR bid price.    (These are the clockwise numbers)

  1. What is the best direct C$/INR bid?  Compute the best indirect C$/INR ask price. (These are the counter-clockwise numbers)

  1. Determine if there is a triangular arbitrage opportunity. (Look clockwise and counter-clockwise) If there is an arbitrage opportunity, do it!  How much risk-free arbitrage profit is there if you start with $1,000,000 and make one trip around the triangle?

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Use the following information to answer the following 3 questions Direct Market for C$/INR                                   Bids                       asks Deutsche Bank’s quote:                               C$.0855/INR       C$.0865/INR Barclays’ quote:                                             C$.0857/INR       C$.0864/INR CSFB’s quote:                                                  C$.0860/INR     C$.0871/INR Markets for INR/$ and C$/$                                                                     dollar bids           dollar asks           dollar bids               dollar asks Deutsche Bank’s quote:                        INR 13.04/$        INR 13.36/$        C$1.125/$        C$1.131/$   Barclays’ quote:                                     INR 13.11/$        INR 13.52/$        C$1.126/$         C$1.130/$ CSFB’s quote:                                          INR 13.22/$        INR 13.35/$        C$1.123/$        C$1.134/$ What is the best direct C$/INR ask price? Compute the best indirect C$/INR...
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