Intro You have $47,000 and observe the following exchange rates: Exchange rate Bid Value of euro in U.S. dollars $1.13 Value of Swiss franc in U.S. dollars $1.01 Value of euro in Swiss francs CHF1.07 Ask $1.14 $1.02 CHF1.08 Part 1 Attempt 2/10 for 9 pts. What is the no-arbitrage value of the euro in Swiss francs (the cross exchange rate)? Use the ask quotes. (reminder: Triangle starts with dollar as you only have dollar to begin with; assume you cannot borrow euro or franc, but can only exchange dollar into either euro or franc) 1.12 Correct Value of euro in Swiss franc Value of euro in $ Value of Swiss franc in $ $1.14/ $1.02/CHF CHF1.118/6 Part 2 Attempt 2/5 for 8 pts. Is there an arbitrage opportunity? If so, what should you do to exploit it? Yes: buy euros with Swiss francs No Yes. buy Swiss francs with euros Correct Since the quoted cross exchange rate is lower than the no-arbitrage exchange rate, the quote is cheap: you should buy euros with Swiss francs at the quoted exchange rate. Part 3 Attempt 1/10 for 10 pts. How many Swiss francs do you get from converting your dollars? 0+ decimals Submit Part 4 - Attempt 1/10 for 10 pts. How many euros do you get from converting your Swiss francs? 0+ decimals Submit Attempt 1/10 for 10 pts. Part 5 How many dollars do you get from converting your euros? 0+ decimals Submit Part 6 Attempt 1/10 for 10 pts. What is your profit from exploiting the opportunity once in S)? 0+ decimals Submit