3. (10 points) Suppose you observe the following exchange rates s(I)-1.2, s(1)-14, s-0.9 f. 0.9/ a. (3 points) Check if there exists an arbitrage opportunity. (Hint: Scro"(1)-S(I) or s(ls()sp = i if there is no arbitrage) either a clockwise b. (3 points) If there trip or is an arbitrage opportunity, then you can choose a counterclockwise trip in ord er to exploit the arbitrage opportunity. That is, Clockwise trip: S e-s Counterclockwise trip: S-+e-s-s Which one is the correc t direction for a triangular arbitrage? Explain the reason brie fly. (Hint: Bay euro at the market rate and sell at the cross rate if ScS). On the other hand, buy euro at the cross rate and sell at the market rate if Sa-() e. (4 points) If there is the opportunity, then do the arbitrage transaction using $10,000