Consider a trader who is seeking arbitrage opportunities. Answer questions a) and b) below.

1. Suppose a trader observes the following exchange rate quotes for euro (EUR): Bank of Atlanta : $1.22 Bank of Savanah : $1.23 Assume the trader has a trading limit of EUR 100,000. Calculate the profit that the trader can make by implementing an arbitrage strategy. Ignore bid-ask spreads.
2. Suppose the quotes from the two banks are as follows: Bank of Atlanta : Bid $1.20 / Ask $1.22 Bank of Savanah : Bid $1.21 / Ask $1.23 How much profit, if available, can the trader generate from her arbitrage strategy?