52. This question has 4 parts and 20 points.

We observe the following exchange rates,

Bank A: 129.87/$

Bank B: 1.1226/$

Bank C: 0.00865/

1). Based on the first two quotations what is the cross rate between and ? (4 points)

2). Which currency is priced higher or lower by comparing the above-computed cross rate with the quotation in Bank C? (4 points)

3) Given the price discrepancy observed above, how will you explore the arbitrage opportunity if you have US dollar? (6 points)

4) Suppose you have one million US dollar, what will be the arbitrage profit? (6 points)