1. Assume the following information:

Quoted Price

Value of Canadian dollar in U.S. dollars $.95

Value of Singapor dollar in U.S. dollars $.40

Value of Canadian dollar in Singapore dollars S$2.35

Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this strategy if you had $1,000,000 to use. What market forces would occur to eliminate any further possibilities of triangular arbitrage?

2. Assume the following information:

Spot rate of Euro = $1.25

180day forward rate of Euro = $1.27

180day Euro interest rate (annual) = 6%

180day U.S. interest rate (annual) = 5%

Given this information, is covered interest arbitrage worthwhile for US investors? Assume that you have $1,000,000 to use for this purpose. Show all steps of calculations. Explain your answer.