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Arbitrage
Arbitrage
Arbitrage is not plausible for Amazon because the ask rate of Bank of Montreal is higher than
the bid rate of ScotiaBank Canada and vice versa.
Triangular Arbitrage
Triangular arbitrage is plausible for Amazon because the implied bid rate for the Euro, € 1.1726,
is actually lower than the calculated cross exchange bid rate, €1.1727. It is also plausible been
that the calculated cross exchange ask rate, €1.728, is above the implied ask rate, €1.1724.
According to Feiner 2019, Amazon is expanding Amazon air in its air fleets to include 50 planes
and new regional hubs and would invest $1.5 billion into a new hub in Northern Kentucky.
Current Spot bid rate for the pound (£) = $1.29
3-month expected forward rate of £ = $39.35
3 month interest rate in U.S = 1.75%
3-month interest rate in U.K = 0.75%
1,162,790,697.67 × (1 + 0.75)
= $1,162,790,697.67 × 1.75
= $ 2, 034, 883, 720.92
Therefore, covered interest arbitrage can be possible for Amazon to invest its money in pounds.
https://www.scotiabank.com/ca/en/personal/rates-prices/foreign-exchange-rates.html
https://www.bmo.com/home/personal/banking/rates/foreign-exchange
https://www.investing.com/currencies/gbp-cad
https://www.investing.com/currencies/gbp-eur
https://www.investing.com/currencies/eur-cad
https://www.global-rates.com/interest-rates/central-banks/european-central-bank/ecb-interest-
rate.aspx
https://www.bloomberg.com/quote/GBP:CUR
https://www.investing.com/currencies/gbp-usd-forward-rates