Please show your work to understand the calculations.

1) A foreign exchange trader at J.P. Morgan Chase, can invest $10 million, or the foreign currency equivalent of the bank's short term funds, in a covered interest arbitrage with Denmark. Using the following quotes of exchange rate and annual interest rate, can he/she make covered interest arbitrage (CIA) profit?

Assumptions				Value
Arbitrage funds available				$10,000,000
Spot exchange rate (kr/$)				6.1920
3-month forward rate (kr/$)				6.2350
Expected future spot rate (Kr/$)				6.2400
US dollar 3-month interest rate				3.000%
Danish kroner 3-month interest rate				6.000%

a)		$2,500.00
b)		$5,000.00
c)		Kr 9,599.99
d)		Kr 681,600

2) Other things equal, and assuming efficient markets, if a Honda Accord costs $24,682 in the U.S., then at an exchange rate of $1.57/, the Honda Accord should cost ________ in Great Britain.

a)		15,721
b)		10,795
c)		24,682
d)		38,751