If you have 1 million usd to conduct one cycle of


1. Assume the following information:

Exchange rate of Singapore dollar in USD = 0.32 USD/SGD

Exchange rate of pound in USD = 1.46 USD/GBP

Exchange rate of pound in Singapore dollars = 4.92 SGD/GBP

If you have 1 million USD to conduct one cycle of triangular arbitrage, what will be your profit?

2. Assume the following information:

1-year interest rate on U.S. dollars = 10.9%

1-year interest rate on Singapore dollars = 10.9%

Spot rate of Singapore dollar = 0.47 USD/SGD

1-year forward premium on Singapore dollars = 3.97%

Given this information, how much profit can be made with covered interest arbitrage, by borrowing 1 million USD?

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Financial Management: If you have 1 million usd to conduct one cycle of
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