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1 = 7. (6 points) Suppose you observe the exchange rate quotes in the table below. Bank Quotations BID ASK HSBC $1.5600 $1.5625 BNP Paribas

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1 = 7. (6 points) Suppose you observe the exchange rate quotes in the table below. Bank Quotations BID ASK HSBC $1.5600 $1.5625 BNP Paribas 1= $1.2340 $1.2350 Credit Agricole 11 1.2670 1.2685 Is there an arbitrage opportunity? Briefly explain. If there is an arbitrage opportunity, how much arbitrage profit can you earn if you have $100,000 available for this investment? Explicitly state which quotes (bid or ask) to use to get the arbitrage profit. Solution

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