Saturday, March 5, 2011

Arbitrage activities by listed companies

 

Currency Arbitrage

1) Buying products made in neighbouring countries at subsidised cost and selling at premium/higher than average price in destination countries

What i have seen – ice cream cakes, pastries, cookies

 

Interest Rate Arbitrage

2) Borrowing funds at low interest rates from source countries and buying properties with yield equivalent to/higher than borrowing cost in destination countries with high borrowing cost

Destination countries – Australia, India

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