1.Suppose at 11am this morning, the following rates are obtained from the FX markets:

In New York 1 =$1.09251

In Frankfurt 1 = 1.1234

In London $1 = 0.85

(a)Determine if there is a currency arbitrage opportunity in this 3-currency situation.

(b)If there is an arbitrage opportunity to be exploited, show how you may be able to capture this profit. YOU NEED TO ILLUSTRATE YOUR PROFITABLE ROAD MAP WITH A NUMERICAL EXAMPLE.