Use the following table for the first two questions:

U.S. $ equivalent

Bid Ask

Canadian dollar 0.8653 0.8667

Euro 1.4000 1.4200

1. What is the BID cross-exchange rate for Canadian dollars priced in euro? Hint: Find the price that a currency dealer will pay in euro to buy Canadian dollars. In other words, how many euros will you get if you convert your Canadian dollar to euro?

2. What is the ASK cross-exchange rate for Canadian dollars priced in euro? Hint: Find the price that a currency dealer will take in euro to sell Canadian dollars. In other words, how many Canadian dollars will you get if you convert your euro to Canadian dollar? 3. You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.20 = 1.00 and the dollar-swiss franc exchange rate is quoted at $1.80 = SF1.00. If a bank quotes you a cross rate of SF1.00 = 1.50 how much money can you make from a triangular arbitrage?

4. You are a German-based treasurer with 5,000,000 euros to invest. The dollar-euro exchange rate is quoted as $1.40/ and the dollar-yen exchange rate is quoted at Yen93/$. If a bank quotes you a cross rate of Yen125/ how much money can you make from a triangular arbitrage?