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In: Finance

Assume you are a trader with China Bank. From the quote screen on your computer terminal,...

Assume you are a trader with China Bank. From the quote screen on your computer
terminal, you notice that Maybank is quoting RM_________/$1.00 (please refer to your
assigned rate in the given table) and CIMB Bank is offering SGD___________/$1.00
(please refer to your assigned rate in the given table) . You learn that Public Bank is
making a direct market between Malaysian ringgit and Singapore dollar, with a current
RM/SGD quote of 3.015.
Show how you can make a triangular arbitrage profit by trading at these prices. (Ignore
bid-ask spreads for this problem.) Assume you have RM1,000,000 with which to
conduct the arbitrage.
What RM/SGD price will eliminate triangular arbitrage?

Given rate for RM/USD Given rate for SGD/USD
4.00 1.20

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jeff jeffy answered 1 year ago
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