2. Banks in Berlin and Tokyo are exchanging euros and yen. The current spot rates for each bank are provided below. Using this information answer the following questions.

Berlin: 1 = 123.67

Tokyo: 1 = 119.94

1. In which market is the yen relatively expensive?
2. In which market is the euro relatively expensive?
3. Suppose you are currently holding 10 million. Describe an arbitrage process of exchanging yen and euros through each bank to increase your ending value of yen. Report this value.
4. Suppose you are currently holding 1 million. Describe an arbitrage process of exchanging yen and euros through each bank to increase your ending value of euros. Calculate this value as well.