Q$3.$ Consider the following rates:

GBP$/$USD

Spot Rate GBP$/$USD

Forwardn

n$=92$ days i$($GBP$)$

$3$ month i$($USD$)$

$3$ month

$1\mathrm{.}67621\mathrm{.}67243\mathrm{.}25$

$1$

$($a$)$ Is there an arbitrage opportunity available? If so explain the steps that would be taken to exploit the arbitrage opportunity.

$($b$)$ What profit would be obtained from $1$ million units of currency?

Q$4.$ Consider the following information:

EUR$/$USD

Spot Rate i $($EUR$)3$ month i $($USD$)3$ month EUR$/$USD

Forward Rate

$1\mathrm{.}1659/612\mathrm{.}12/151\mathrm{.}14/18?$

$($a$)$ Using round trip transactions, calculate the $(3$ month$)$ Fa and Fb at which there would be no profitable opportunities to exploit.

$($b$)$ Choosing forward rates at which there would be no profitable opportunities to exploit show, using a form of one$-$way arbitrage, that there are $$profits$$ to be exploited.