0

# How do you calculate arbitrage profit?

Updated: 1/19/2023

Wiki User

13y ago

a 2-year bond pays annual coupon of 5.5%, has annual effective yield of 9.3%,and has a par value of RM100. the 1-year spot rate is 7% and the 2-year spot rate is 9%.

describe the strategy that requires the sale or purchase of exactly one of the 5.5% 2-year bonds and produces arbitrage profit of RM0.59

Wiki User

13y ago

Joerich Ihechi

Lvl 1
1y ago
To calculate arbitrage profit, you need to take into account the prices at which you can buy and sell the same security in different markets. My recommendation for you: 𝓱𝓽𝓽𝓹𝓼://𝓪𝓻𝓫𝓲𝓽𝓻𝓪𝓭𝓮𝓼.𝓬𝓸𝓶/𝓼𝓲𝓰𝓷𝓾𝓹/𝓘𝓞𝓤𝓑𝓟35𝓩𝓘80.𝓱𝓽𝓶𝓵

Joerich Ihechi

Lvl 4
1y ago

o calculate arbitrage profit, you need to take into account the prices at which you can buy and sell the same security or commodity in different markets. Subtract the lower price from the higher price, and that will be your arbitrage profit. My recommendation for you: 𝓱𝓽𝓽𝓹𝓼://𝓪𝓻𝓫𝓲𝓽𝓻𝓪𝓭𝓮𝓼.𝓬𝓸𝓶/𝓼𝓲𝓰𝓷𝓾𝓹/𝓘𝓞𝓤𝓑𝓟35𝓩𝓘80.𝓱𝓽𝓶𝓵

Earn +20 pts
Q: How do you calculate arbitrage profit?
Submit
Still have questions?
Related questions

### What is search arbitrage?

Search Arbitrage is the profit realized from the price discrepancies in the value of search results to a query.

### How does arbitrage betting work?

Arbitrage betting is when the gambler will put a bet on different outcomes of the same event. This means the better can make a profit regardless of how the event turns out.

### What does the term arbitrage profit means?

Arbitrage profit is profit derived from a riskless (or near riskless) transaction. For example, say gold is selling on the London exchange for \$800 per oz and gold is selling on the New York exchange for \$804 per oz. Buying one oz of London gold and selling one oz of New York gold (trades in close proximity) provides an arbitrage profit of \$4 (less transaction fees). The purchase and sale will likely have the effect of increasing the price of London gold and decreasing the price of New York gold. So for every subsequent trade, the arbitrage profit will be lower and lower until the prices are at parity.

Arbitrage trading is trading that takes advantage of a difference in price between two or more different markets, to make a profit equal to the difference in the market prices. Arbitrage trading is useful in banks and brokerage firms.

### What are some equity Arbitrage funds in India?

These are Mutual Funds that invest in Arbitrage Opportunities.Note: Arbitrage Opportunities are a special class of investment where the fund manager tries to make a profit out of the pricing mismatch between the Equity and Derivatives Market. It is a separate topic in itselfExample:a. ICICI Prudential Equity and Derivatives Fund - Income Optimiser Planb. HDFC Arbitrage Fund - Retailc. Kotak Equity Arbitrage Fundd. etc

### Should you calculate the profit on cost or Sales?

We should calculate the profit on sales

### What is a currency expert called?

Hank Paulson A person who trades one currency with another, and/or between markets, hopefully, for profit, is said to be doing 'arbitrage', and is called an arbitrageur. Please see 'arbitrage' on answers.com for further detail. A coin collector is known as a numismatist.

### Which of these describes the process of exchanging currency between three banks in order to gain a profit from the exchange rate of each type of currency?

triangular arbitrage

### When was Arbitrage released?

Arbitrage was released on 09/14/2012.

### What was the Production Budget for Arbitrage?

The Production Budget for Arbitrage was \$12,000,000.

### What is an arbitrage pricing theory?

An arbitrage pricing theory is a theory of asset pricing serving as a framework for the arbitrage pricing model.

net profit/sales