4. (a) For what reasons may a country prefer a floating exchange rate over a fixed exchange rate? (40 Marks) (b) Assume that the export price of a Ferrari from Italy is 150,000. The exchange rate is 0.7937/. The forecast rate of inflation in the UK is 1.5% per year and is 0.0% per year in Italy. Assuming 80% pass-through, what will be the price of the Ferrari in pounds at the end of the year? (30 Marks) Page 2 of 3 FIN 3015 (c) You have $1,000,000. Can you use triangular arbitrage to generate a profit using the rates listed below? If so, explain the order of the transactions that you would execute, and the profit that you would earn