corporate treasury with operations in sydney simultaneously calla westpac Bank in sydney and Barclays in London

corporate treasury with operations in sydney simultaneously calla westpac Bank in sydney and Barclays in London

1.A corporate treasury with operations in sydney simultaneously calla westpac Bank in sydney and Barclays in London. The two banks give the following quotes at the same time on the euro.

West Sydney Barclays London

A$ 1.1840/Euro A$ 1.1830-50/Euro

Explain, using A$ 1 Million or its euro equivalent, how the corporate treasury could make geographical arbitrage profit with the two exchange rate nquote.

Solution

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