1 Arbitrage 25 points

a) (5 points) Simple arbitrage: Suppose that the spot exchange rate is 1.35/$ in Singapore and 1.33/$ in Tokyo. Explain the process you would use to make money from this discrepancy.

b) (4 points) How much prot could you make in the above situation if you have $10,000?

c) (5 points) Would you make the same amount of prot if one of the prices quoted above was a forward market rate for 6 months from now?

d) (6 points) If you saw the following information, explain the process you would use to make money from this situation assuming that you have US dollars right now.

In case you have trouble reading the image above, the exchange rates are: $1.20/e, 15,841.16 $/BTC, and 12,398.98 e/BTC.

e) (3 points) Why do you think it was possible for a situation like the one in the previous part to exist?

f) (2 points) How much prot could you make in the above situation if you have $10,000?