Explore BrainMass

# Arbitrage Pricing Theory (APT)

### Determining a Profitable Arbitrage Situation

Suppose the euro is quoted at 0.7064-80 in London and the pound sterling is quoted at 1.6244-59 in Frankfurt. How would I find out if this was a profitable arbitrage situation or not? Please describe it.

7. Suppose the euro is quoted at 0.7064-80 in London and the pound sterling is quoted at 1.6244-59 in Frankfurt. a. Is there a profitable arbitrage situation? Describe it. b. Compute the percentage bid-ask spreads on the pound and euro.

### Portfolio Theory: Risky Assets

1. Explain each of following: a) the efficient frontier b) the capital market line c) the security market line 2. Risky assets can be combined to form a risk-less asset. Discuss.

### Analyze the customer expectations for your current employer and a different international organization in an industry or field where you might like to be employed. Consider these questions in your analysis: How well do the organizations meet their customers' needs? To what extent are total quality processes employed?

Businesses exist to make money. They prosper by organizing their work so they can offer products and services that meet their customers' needs efficiently and effectively. Experts generally recognize that organizations that... Needless to say, the third one is the most apt to answer your question: if you ask your customers wh

### Capital Assest Pricing Model

Compare with Arbitrage Pricing Theory Graduate Level

### Theory of Constraints: Managing Bookstore More Efficiently

We have a university bookstore that controls the majority of local market share for used and new textbooks. The bookstore primary constrains are floor and shelf space for fast selling items such as textbooks and market share for slow-selling items such as general merchandise. How can they manage the store more efficiently? Ho

### Locational Arbitrage; Hedging Translation Exposure

Assume the bid rate of an Australian dollar is \$.60 while the ask rate is \$.61 at Bank Q. Assume the bid rate of an Australian dollar is \$.62 while the ask rate is \$.625 at Bank V. Given this information, what would be your gain if you use \$1,000,000 and execute locational arbitrage? That is, how much will you end up with over a

### An Expectation theory question is included.

Which of the following is most correct? a.If the expectations theory is correct (that is, maturity risk premium = 0) then an upward sloping yield curve means that the market believes that interest rates will rise in the future. b.A 5-year corporate bond may have a yield less than a 10 year treasury bond. c.The yield c

### Using the Perfect Information Theory and the Random Walk Theory

Need to answer in 2 -3 paragraphs using the following information. You work for an investment firm and recently wrote a position article on your firm's approach to risk. The article now appears on your company's website. It has, interestingly enough, generated e-mailed responses from potential clients and your firm is asking

### Investment Science (Arbitrage; Bonds; Forward Rate; Return): 1. Is there any other arbitrage opportunity? 2. Given above bonds, what are the implied forward rates? 3. If one was to invest \$1,000 two years from now for one year. Which would be the best strategy (what forward rate to use)? What is the return?

Please see attachment for tables and pre-question information. Questions: Data: Suppose the following coupon info Maturity (year) Coupon Rate price 1 0% 97 2 3.00% 99 2 0% 91 3 4.00% 98 3 0% 87 Please note there are arbitrage opportunities (shown below). The 1-yr rate implied by the 1-yr zero coupon bou