Question 1 (15 points) Assume that you specialize in cross-rate arbitrage. You notice the following quotes: The dollar-euro exchange rate: $1.6 1.00 The dollar-pound exchange rate: $2.0 1.00 And a bank is offering you the a cross rate of 1.00 - 1.20 a) Ignoring transaction costs, do you have an arbitrage opportunity based on these quotes? (5 points) b) If there is an arbitrage opportunity, what steps would you take to make an arbitrage profit, and how would you profit if you have $1,000,000 available for this purpose. (10 points)