1 the following quotes present an arbitrage opportunitybank, Ask an Expert

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1. The following quotes present an arbitrage opportunity.

Bank A: $1.20=1 euro

Bank B: 1.10euro=1 british pound

Bank C: $1.25=1 britishs pound

What is the arbitrage profit in terms of a percentage?

2. Shanken Corp. issued a 30-year, 8 percent semiannual bond 3 years ago. The bond currently sells for 93 percent of its face value. The company's tax rate is 35 percent.

a. What is the pretax cost of debt?

b. What is the aftertax cost of debt?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92653396

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