The Mexican peso is quoted in direct terms at 28.74/MXN bid and 28.77/MXN ask in Tokyo. The

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The Mexican peso is quoted in direct terms at “¥28.74/MXN bid and ¥28.77/MXN ask” in Tokyo. The yen is quoted in direct terms in Mexico City at “MXN0.0341600/¥ bid and MXN0.03420/¥ ask.”

a. Calculate the bid–ask spread as a percentage of the bid price from the Japanese and from the Mexican perspective.

b. Is there an opportunity for profitable arbitrage? If so, describe the necessary transactions using a ¥1 million starting amount. Take your profit in yen.

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