Solved: Can you find an arbitrage opportunity, Finance Basics

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Can you find an arbitrage opportunity

Problem: On checking the Telerate screen, you see the following exchange rate and interest rate quotes:

Currency 90-Day Interest Spot 90- Day Forward
Rates (Annual) Rates Rates
Dollar 4.99%- 5.03%
Swiss Franc 3.14%- 3.19% $0.711- 22 $0.726- 32

a. Can you find an arbitrage opportunity?

b. What steps must you take to capitalize on it?

c. What is the profit per $1 million arbitraged?

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Finance Basics: Can you find an arbitrage opportunity

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