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3. (12 points) Suppose the British pound exchange rate is 0.8= $1, and the Euro exchange rate is 1 = $1.10. a. What is the

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3. (12 points) Suppose the British pound exchange rate is 0.8= $1, and the Euro exchange rate is 1 = $1.10. a. What is the cross-rate in terms of pounds per euro? b. Suppose the market cross-rate is 0.95 = 1. Explain the three transactions that you will need to carry out triangle arbitrage starting with $100 and ending with dollars. c. What is the profit from this arbitrage.? pala

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