Assume that the following spot exchange rates exist today:

$61=$$$1\mathrm{.}50$

$C$$$=$$$\mathrm{.}75$

$1=C$$$2$

Assume no transaction costs. Based on these exchange rates, can triangular arbitrage be used to earn a profit? Explain.

$2.$ Assume the following information:

Spot rate of $=$$$1\mathrm{.}60$

$180-$day forward rate of $=$$$1\mathrm{.}56$

$180-$day British interest rate $=4\%$

$180-$day U$.$S$.$ interest rate $=3\%$

Based on this information, is covered interest arbitrage by U$.$S$.$ investors feasible $($assuming that U$.$S$.$ investors use their own funds$)?$ Explain.

National Bank quotes the following for the British pound and the New Zealand dollar:

Quoted Bid Price

Value of a British pound $()$ in $

Value of a New Zealand dollar $($NZ$$)$ in $

Value of a British pound in

New Zealand dollars

$$1\mathrm{.}61$

$$\mathrm{.}55$

NZ$$2\mathrm{.}95$

Quoted Ask Price

$$1\mathrm{.}62$

$$\mathrm{.}56$

NZ$$2\mathrm{.}96$

Assume you have $$10,000$ to conduct triangular arbitrage. What is your profit from implementing this strategy?

$6.$ Covered Interest Arbitrage. Assume the following information:

$\backslash$table$[[$Spot rate of Canadian dollar,$=$$$\mathrm{.}80$