1.Chapter 7, Question 2. Locational Arbitrage Assume the following information: Beal Bank Yardley Bank Bid price of New Zealand dollar $.401 $.398 Ask price of New Zealand dollar $.404 $.400 Given this information, is locational arbitrage possible? If so, explain the steps involved in locational arbitrage, and compute the profit from this arbitrage if you had $1 million to use. What market forces would occur to eliminate any further possibilities of locational arbitrage?

2.Chapter 7, Question 4. Triangular Arbitrage Assume the following information: Quoted Price Value of Canadian dollar in U.S. dollar $.90 Value of New Zealand dollar in U.S. dollar $.30 Value of Canadian dollar in New Zealand dollar NZ$3.02Given this information, is triangular arbitrage possible? If so, explain the steps that would reflect triangular arbitrage, and compute the profit from this arbitrage if you had $1 million to use. What market forces would occur to eliminate any further possibilities of triangular arbitrage?

3.Chapter 7, Question 6. Covered Interest Arbitrage Assume the following information: Spot rate of Canadian dollar $.80 90-day forward rate of Canadian dollar $.79 90-day Canadian interest rate 4% 90-day U.S. interest rate 2.5%Given this information, what would be the yield (percentage return) to a U.S. investor who used covered interest arbitrage? (Assume the investor invests $1 million.) What market forces would occur to eliminate any further possibilities of covered interestarbitrage?

4.Chapter 7, Question 21. Deriving the Forward Rate Assume that annual interest rates in the United States are 4%, while interest rate in France are 6%. a.According to IRP, what should the forward rate premium or discount of the euro be?b.If the euros spot rate is $1.10, what should the 1-year forward rate of the euro be?