You are a forex arbitrage trader in Hong Kong
Subject: Business / Finance
Question
You are a forex arbitrage trader in Hong Kong. You observe the following quotes on your Bloomberg terminal:
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Spot $/CAD
0.6793
0.6803
3-month Forward $/CAD
0.6800
0.6820
Interest rate $
6.0625
6.1875
% per annum (APR)
Interest rate CAD
4.0000
4.1250
% per annum (APR)
What would you do? Describe the necessary transactions and state your profit in CAD. Provide your steps and explain your answers.
