Instructions: Indicate your answers in boxes below (do not show calculations). No partial credit for an incorrect answer. Answers must be accurate to the number of decimals indicated in each question in order to earn credit. Problem 1 of 2: Profitable Arbitrage Strategy (12 Points) Assume the quotes given below. Calculate how a market trader at National Westminster with 1 million pounds can make an inter-market arbitrage. Indicate the currency conversions necessary for the two conversion paths, below Important: In order to earn points for parts a-h, your answers must be correct to two decimals. For part I, please circle your answer. (Points: a-c, e-g: 1.5 points; d, h, i: 1 point) Assumptions Exchange rate Bank of America quote: $/ 1.3100 Sumitomo Bank quote: National Westminster quote: I$ 114.50 Initial investment in Pounds) E 1,000,000 146.81 Conversion Path 1 ( * - $ + ) a. Step 1: b. c. Step 2: US$ Step 3: US$ d. Net Profit or loss (in ) Conversion Path 2 ( $ - * ) e. Step 1: $ f. Step 2: $ - * g. Step 3: * h. Net Profit or loss (in ) Which conversion path would you choose for an arbitrage profit? (Please circle) i. Path 1 | Path