PLEASE ANSWER IT CORRECTLY. MOST ANSWERS I FOUND WERE WRONG. THANK YOU. Your favorite crooner visited Martinique an island in the Lesser Antilles in the eastern Caribbean Sea and he immediately fell in love with this island mainly because of its pleasant environment. He then purchased the island and became one of the top government officials of this small yet, open economy country.

Assume the crooner have an initial $1,200,000 to purchase the island, which costs $3,000,000. However, he would utilize the intermarket cross-rates (provided below) arbitrage to potentially make profit, transforming his $1,200,000 to over $3,000,000. Show how much he could make a profit in U.S dollar vs. cross rate arbitrage. Source 1: 1.9324 ($/LYD) Source 2: 1.9405(SAR/LYD) Source 3: 0.2667($/SAR) FYI: LYD is the Libyan Dinar SAR is the Saudi Arabian Riyal

Suppose the crooner wanted to weaken the currency of his kingdom in order to increase exports (mostly coconuts). What kind of foreign exchange market intervention would the Central Bank of Martinique (CBM) have to make to cause its currency to depreciate? Explain.

Show as clear as possible the mechanism i.e., pushing arrows of such intervention in part (b) that would lead the currency to depreciate.

How CBM could offsets its intervention activities in the foreign exchange market so that its monetary base stay constant? Explain