1. Take the following two exchange rates and compute the INR/EUR cross exchange rate. INR12.15/USD and USD1.13/EUR

2. In question 1, if there is a direct cross exchange rate of INR 13.94/ EUR, is there a triangular arbitrage opportunity? If yes, start with $50,000 and indicate how much triangular arbitrage profit exists for 1 trip around the triangle.

3. In thinking about the indirect / bid price, which diagram is appropriate?

A) -- $ --

B) $ -- --

C) -- $ --

D) -- -- $

4. In thinking about the indirect / ask price, which diagram is appropriate?

A) -- $ --

B) $ -- --

C) -- $ --

D) -- -- $