Assume that a bank has quoted the Swiss Franc at $1.07, the Australian Dollar at $0.75, and the quoted cross exchange rate of CHF/AUD is 1 Franc= 1.48 Australian Dollars. Mia currently has $800,000 and wants to capitalize on a possible arbitrage opportunity. Assume that the bid/ask is the same in this problem.

1) Does an arbitrage opportunity exist?

2) If an arbitrage opportunity exists, calculate Mias gain/loss. Show all supporting work.