1. Riskless profit on the Swiss franc. The following exchange rates are avaliable to you.(you can buy or ssell at the started rates.)
Mt Fuji Bank ¥120.00/A$
Mt Rushmore Bank SF1.6000/A$
Mt Blanc Bank ¥80.00/SF
Assume that you have an initial SF 10,000,000. Can you make a profit via triangular arbitrage? If so, show steps and calculate the amount of profit in Swiss francs.
2. Australian-euro arbitrage. A corporate treasury with operations in Sydney simultaneously calls Westpac Bank in Sydney and Barclays in London. The two banks give the following quotes at the same time on euro:
Westpac Sydney: A$1.1840-60/€ Barclays London A$1.1830-50/€
Explain, using 1 million or its euro equivalent, how the corporate treasury could make geographical arbitrage profit with the two exchange rate quotes.