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Participants in the foreign exchange market include speculators and arbitragers. Required: a) Briefly explain the two types of arbitrage? (4 marks) b) What arbitrage strategy

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Participants in the foreign exchange market include speculators and arbitragers. Required: a) Briefly explain the two types of arbitrage? (4 marks) b) What arbitrage strategy can be used if the following rates are observed in the market and what will be the risk free profit amount? Show all calculations. USD1 = AUD1.3640 (6 marks) USD1 = SGD1.3640 AUD1 = SGD 1.2410

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