1.Use the following information to answer the next two questions. The US dollar/euro exchange rate is $1.6/...
Question:
1.Use the following information to answer the next two questions.
The US dollar/euro exchange rate is $1.6/ while the Canadian dollar/US dollar exchange rate is C$1.25/$.You also observe that the actual euro/Canadian dollar cross exchange rate is.65/C$.Find the triangular arbitrage profit (in USD) available to someone that has access to $1,000,000. Round intermediate steps to four decimals and your final answer to two decimals. Do not use the dollar sign when entering your answer.
2.A hedge fund managerhas $4,000,000 to invest in the foreign currency market. The dollar-euro exchange rate is quoted as $1.1/ and the dollar-pound exchange rate is quoted at $1.25/. If a bank quotesa cross rate of 1.20/,how much money can he make (in terms of dollars) via triangular arbitrage? Round intermediate steps to four decimals and your final answer to two.Do not use the dollar sign when entering your answer.