1. Your company has $3,000,000 that can be used for triangular arbitrage. You observe the following exchange rates are the following:

You can sell dollars for 0.888 euros per dollar and buy dollars for 0.896 euros per dollars.

You can sell Australian dollars (A$) for $.73 and buy Australian dollars for $.75.

You can sell Australian dollars (A$) for 0.68 euros per A$ and buy Australian dollars (A$) for 0.70 euros per A$.

a. What profits can you earn from triangular arbitrage?

b. Someone in the company is concerned about the plan to use triangular arbitrage like this, calling it a risky scheme that could backfire and hurt the profitability of the company. are they right? Explain why or why not.