Question: 2. Given the following three currency quotes given by a Tokyo bank and a London bank: 110.22/$ 142.64/ 0.8060/$ Please answer parts (a) and (b)

2. Given the following three currency quotes given by a Tokyo bank and a London bank:

110.22/$

142.64/

0.8060/$

Please answer parts (a) and (b) in the order they are given.

a. Show whether there is an arbitrage opportunity implied in these three quotes.

b. Starting with a nominal $68 million, show how much arbitrage profit (if any) you can make by trading the currencies at the given rates.

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