Question 1: A dealer has PKR 100 million and receives the following rates of foreign exchange from the market. Find out how dealer can earn maximum arbitrage profit in FX market transaction. Solve and explain step by step. ( /5) USD/PKR 138/139 GBP/PKR 199/201 GBP/USD 1.2729/35 EURO/GBP 1.1520/33 Question: 2 following FX rates & interest rates ( /10) CURRENCY SPOT RATES INTEREST RATES 3M (84 DAYS) (%) INTEREST RATES 6M (181 DAYS) (%) EURO/USD 1.0607/15 EUR 3 MONTH 0.02/0.04 EUR 6M 0.1/0.15 GBP/USD 1.5089/106 GBP 3 MONTH 0.25/0.30 GBP 6M 0.30/0.35 AUD/USD 0.7225/33 AUD 3 MONTH 1.05/10 AUD 6M 1.25/35 USD/JPY 122.55/72 JPY 3 MONTH 0.10/15 JPY 6M 0.15/20 USD/CNY 6.3920/45 CNY 3 MONTH 3.80/90 CNY 6M 4.10/20 USD/PKR 106.10/20 PKR 3 MONTH 5.90/00 PKR 6M 6.10/20 USD 3 MONTH 0.20/25 USD 6M 0.40/45 Calculate the Following: 1. 3 month forward rate & swap points of Euro/AUD 2. 3 Month forward points and 6 month forward points of JPY/PKR Question: 3. You are treasurer of a bank, in your bank Advance to deposit ratio is high (70%), investment to deposit ratio is low (30%). You are expecting liquidity crunch due to COVID-19 therefore depositors will take out their cash from your bank and want to spend. ( /5) Required: 1. Elaborate in detail how you will handle situation. 2. List down the risk factors that your bank may face? 3. How bank should mitigate these risks?