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In: Finance

A corporate treasury working out of Vienna with operations in New York simultaneously calls Citibank in...

  1. A corporate treasury working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London. The two banks give the following quotes at the same time on the euro:

Citibank NYC

Barclays London

$0.7451-55/€

$0.7445-75/€

Using $4 million or its euro equivalent, show how the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes.

Solutions

Expert Solution

We have $4 million. To make arbitrage profit, ww will buy Euros from country where it is available cheap and sell it in other country.

Kindly refer the attached images for calculation

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jeff jeffy answered 2 years ago
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