Comparing Zurich's 1GBP=2.5038CHF, we can see that due to Zurich's Swiss franc/pound exchange rate,
It is lower than the arbitrage exchange rate in new york market, so you should buy pounds in Swiss francs in Zurich.
Now, the businessman bought 399393 pounds with 1 10,000 Swiss francs (100000 divided by 2.5038 Swiss francs/pound =GBP399393).
Then, the businessman bought US$ 653,207 (GBP 399,393 times 1.6355 USD/GBP = US$ 653,207) in new york market.
Finally, the US dollars are converted into Swiss francs 10036 14 (US$ 653207 multiplied by 1.5369 Swiss francs/US$ = Swiss francs 10036 14).
Finally, the merchant made a profit of 36 14 Swiss francs (1003614-1000000 = 3614 Swiss francs).
2. The spot exchange rate on June 3rd is known as Euro 1 = USD1.0610-1.0630; The three-month forward discount is 50/30 (it should be emphasized that this is
Indirect price method); On September 4th, the spot exchange rate was Euro 1 = USD 1.0820- 1.0850. Now, the key issue is 1000000 euros of company A.
If you sell it for a long time, the value you get will be higher or lower than when you don't sell it.
First, let's assume that we sold a three-month forward to the bank. According to the meaning of the question, we get the forward exchange rate after three months as follows.
Euro 1 = USD1.0660-1.0610
In fact, we can already know that we should not do forward, because1.0820 > 1.06 10
Of course, we can also calculate; If you do forward, you will get 1066000 USD (1000000 *1.0660 =106600 USD).
If you don't do forward, you will get 1082000 USD (100000 *10820 =1082000 USD).
Because it is more profitable not to do forward, you should not do forward.