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a) Suppose EUR/USD exchange rate is 1.08 (1EUR=1.08USD). EUR/TRL exchange rate is 8.2878. Given these exchange rates and assuming there are no frictions in the

a) Suppose EUR/USD exchange rate is 1.08 (1EUR=1.08USD). EUR/TRL exchange rate is 8.2878. Given these exchange rates and assuming there are no frictions in the market, what must be USD/TRL exchange rate? Why? b) Suppose your Turkey-based company is exporting 700 tons of produce to Germany at a price of 200EUR per ton. Given the above exchange rate, what is your profit/loss due to exchange rate difference, if EUR/TRL exchange rate decreases by 150 pips in Turkish Liras?

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