Answer to Question #61267 in Finance for Alex

Question

if bank X is quoting “A$1.5838/€ bid and A$1.1682/€ ask” and bank Y is quoting “A$1.1684/€ and A$1.1690/€ ask”. If you buy € 2 Million from X simultaneously sell € 2 Million to Y. Calculate arbitrage profit

Answer 1

If bank X is quoting “A$1.5838/€ bid and A$1.1682/€ ask” and bank Y is quoting “A$1.1684/€ and A$1.1690/€ ask”, then if you buy € 2 Million from X and simultaneously sell € 2 Million to Y, then the arbitrage profit will be:
TP = 2,000,000*(1.1684 - 1.1682) = $400