Question: Please help with question 3.1 and 3.2 QUESTION 3 (15 marks) Assume the following exchange rates: Rand/Dollar $1 = R22.50 Pound/Rand R1=60.043 Dollar/Pound $1= 10.821

Please help with question 3.1 and 3.2 QUESTION 3 (15 marks)

Please help with question 3.1 and 3.2

QUESTION 3 (15 marks) Assume the following exchange rates: Rand/Dollar $1 = R22.50 Pound/Rand R1=60.043 Dollar/Pound $1= 10.821 It is estimated that the Rand/Dollar exchange rate will be $1=R21.92 next year. REQUIRED: 3.1 Calculate the cross rate in terms of the pound per dollar. (4) 3.2 Is there arbitrage opportunity in this situation? Provide a reason for your answer (2)

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