Question 1 (Triangle Arbitrage): Doug Bernard specializes in cross-rate arbitrage. He notices the following quotes:

Swiss franc/dollar = SFr1.5971/$

Australian dollar/U.S. dollar = A$1.8215/$

Australian dollar/Swiss franc = A$1.1390/SFr

a. (8 points) Ignoring transaction costs, does Doug Bernard have an arbitrage opportunity based on these quotes?

b. (12 points) If there is an arbitrage opportunity, what steps would he take to make an arbitrage profit, and how would he profit if he has $1,000,000 available for this purpose.

Also, this differs from the others since the A$ rate is less than the implicit cross rate.