CANNAINVESTOR Magazine August / September 2017 | Page 48

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A good example of this can once again be found in past articles. In fact, the importance of diversification including geographical has been a common theme and anchor within these pages. Let’s look at Invictus MD Strategies Corp (TSXV:IMH: OTC:IVITF). Why? It was the cover of the January 2017 issue and it’s a foreign company (Canada) are good enough reason. We will use Friday January 13th as our transaction date for the buy and July 24th at 10:00am for the sale. The share price for the buy was CAD$1.36 for IMH and USD$1.04 for IVITF and the exchange rate 1.3114. Multiplying the exchange rate by the share price of IVITF yields a Canadian dollar equivalent share price of CAD$1.36 (no arbitrage opportunity). But what about on July 24th at 10:00am (investor sells)? The share prices on that date and at that time were CAD$1.29 and USD$1.05 and the exchange was 1.25 (Canadian dollar has strengthened) giving IVITF an equivalent share price of CAD$1.31. A difference of CAD$0.02. Was this an arbitrage opportunity? The volume of shares involved and the transaction costs as well as other costs such foreign currency buy and sell rates and any taxes etc would need to be known. What if the US Retail Investor bought those shares on the Canadian market in Canadian dollars instead of on the OTC? Using a 25,000 share purchase and will ignore other costs for this exercise.