1. (8 points) Corresponding with three banks simultaneously, the following exchange rates are available to you:

Deutsche Bank quote for U.S. dollar per euro $ 1.155 /

Crdit Agricole quote for euros per pound 1.210 /

Citibank quote for U.S. dollar per pound $ 1.360 /

You can buy or sell at these rates (assume no transaction fees for buying or selling at these rates), and have access to up to 4,000,000.

(a) Is there an arbitrage opportunity? Explain how you know. (

b) What are the transactions you would make? Describe all the details of the (three) trades that lead to an arbitrage profit (include amounts paid and received, and units)

(c) What is the arbitrage profit gained by making all the trades in part (b)?