2. (10 pts) Imagine that you are in Tokyo about to catch a plane back to your home base in Paris. Before leaving Paris you were looking at a nice Rolex watch that sells for 5,000 euros. While browsing shops in the airport you see the identical watch selling for 600,000 yen. Should you buy it in Japan to admire on your wrist while returning home or wait and buy it in Paris? (use rates in \#1 above). a. What is the implied exchange rate between the yen and the euro using the watch as comparison. b. What is the cross rate between the yen and the euro using the rates from question 1. c. What should the price in yen be to eliminate the arbitrage opportunity? 2. (10 pts) Imagine that you are in Tokyo about to catch a plane back to your home base in Paris. Before leaving Paris you were looking at a nice Rolex watch that sells for 5,000 euros. While browsing shops in the airport you see the identical watch selling for 600,000 yen. Should you buy it in Japan to admire on your wrist while returning home or wait and buy it in Paris? (use rates in \#1 above). a. What is the implied exchange rate between the yen and the euro using the watch as comparison. b. What is the cross rate between the yen and the euro using the rates from question 1. c. What should the price in yen be to eliminate the arbitrage opportunity