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Question 2. The following spot and 30-day forward quotes involving Japanese yen (), Euro () and United States dollars ($) are given: Spot 30-day 110.37 197/$1 20-25 1.4257 71/U.S.$1 36-30 (a) Calculate the bid and ask yen cross rates on spot euro. [3] marks (b) There is a spot quote of 78.25 96/1. Compare this with the rates in part (a) above to determine whether or not an arbitrage opportunity exists. (You are not required to actually calculate any arbitrage profit or loss) [3] marks (c) Calculate the actual bid and ask rates for the 30-day forward /$ and /$ quotes. [4] marks euro against yen (d) What is the forward premium or discount on buying 30-day delivery if the actual spot quote of 78.25 96/1 is used? [3] marks (e) If a Japanese business is expecting to pay a large sum of euro in 30 days, explain how it can use a money-market hedge to lower the underlying transaction risk. [7] marks