a) Suppose you have the following quotations: /$ /$ 0.8032 -0.8048 125.000 -125.110 What are the bid-ask prices of the yen in euro or / ? [15%] b) Ingo Schmidt, a cross-rate trader at Deutsche Bank, notices that Crdit Lyonnais is quoting dollars against euro /$ at 0.7627 - 0.7720, and Barclays is quoting British pounds against dollars $/ at 1.9072 - 1.9423. He next finds that Crdit Agricole is making a direct market between the euro and the pound, with a current price of / at 1.4055 -1.4490. Ingo has $5,000,000 to invest. Is there a possibility of making a triangular arbitrage profit? Illustrate the strategy that Ingo can employ to make a profit. [35%] c) And if the ask price (/) instead of being1.4490 is 1.4550, how would your answer to b) change? Comment on the possibility of making profits in the presence of bid-ask spreads. [20%] activate W d) Describe the historical evolution of capital mobility from the Gold Standard to the present time. [25%] Settings