Question: Question 2 (10 marks) The Table below provides quotes from Bank ABC for the Canadian dollar in U.S. dollars (A), the Euro in U.S. dollars

Question 2 (10 marks) The Table below provides quotes from Bank

Question 2 (10 marks) The Table below provides quotes from Bank ABC for the Canadian dollar in U.S. dollars (A), the Euro in U.S. dollars (B) and the Canadian dollar in Euros (C). Bid price Ask price A USD/CAD 0.70 0.71 B USD/EUR 1.064 1.12 EUR/CAD 0.65 0.67 (a) Calculate the bid-ask spread for each exchange rate quote. (3 marks) (6) Calculate the appropriate EURICAD bid and -ask cross exchange rates. (2 marks) (c) Use your answers in (a) to explain if triangular arbitrage will be profitable, assuming you have US$1,000 to invest

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