1. Assume you notice the following information. Assume you
spend $1 million USD to create an arbitrage trading strategy.
What is your profit is USD. Remember to consider the profit
after you pay back your loan
• Spot (CAD/USD) =1.50
• 1 Year Forward (CAD/USD) = 1.60
1 Year Canadian interest rate of 8% in Canadian Dollars (CAD)
• 1 Year US interest rate of 4% in US Dollars (USD)
2. Given the following cross currency rates, identify an arbitrage trade
and show the profit if you start with $1,000. (USD = U.S. dollar,
SGD = Singapore dollar, CHF = Swiss franc)
SGD:USD 3.00
CHF.USD 1.50
SGD:CHF 2.20