1. You observed the bid rate of a New Zealand dollar is $.3325 while the ask rate is $.3342 at Bank X. The bid rate of the New Zealand dollar is $.3232 while the ask rate is $.3249 at Bank Y. What would be your dollar amount profit if you use $2,000,000 to execute locational arbitrage?

2. The following is market information:

Current spot rate of pound	=	$1.47
90-day forward rate of pound	=	$1.49
3-month deposit rate in U.S.	=	1.1%
3-month deposit rate in Great Britain	=	1.3%

If you have $100,000 and use covered interest arbitrage for a 90-day investment, what will be the amount of U.S. dollars you will have after 90 days? 3. Assume the following information:

Current spot rate of Australian dollar	=	$.90
Forecasted spot rate of Australian dollar 1 year from now	=	$.88
1-year forward rate of Australian dollar	=	$.91
Annual interest rate for Australian dollar deposit	=	3%
Annual interest rate in the U.S.	=	2%

What is your percentage return from covered interest arbitrage with $500,000?