A foreign exchange trader working out of Berlin with operations in San Francisco simultaneously calls Citibank in San Francisco and Lloyds Bank in London. The banks give the following quotes on the euro simultaneously. Citibank Chicago Lloyds Bank London $1.2623-24/ $1.2620-21/.

a) Is there an arbitrage opportunity? If yes, show the steps the trader needs to take to make an arbitrage profit with $5,000,000 available in his bank account. b) Arbitrage opportunities are said to be rather scarce due to information technology advancements. Do you agree or disagree with this statement? Why?

What is the answers to questions a) and b)??