Question 1, Consider the following information: the British pound is currently trading at $1.60 US and the Euro is trading at $1.28 US. Someone quotes a Euro price for the British Pound at 1 1.23. carefully describe a series of trades you could make to earn big money. How much do you make per unit of currency initially traded? Question 2, Sven, our international banker friend in Sweden and all around cool dude, observes that $10,000 U.S. T-bills that mature in one year are selling at discount at $8333.33 and 2000 SKr Swedish Government bills that mature in 1 year are selling at discount at 1777.78 SKr. Currently, the dollar is trading at 6.50 SKr. If uncovered interest parity holds, where does the market believe the dollar will trade at 1 year from now? Show your work. Question 3, Sven notes one day that the premium on a 150,000 Euro June Call Option with strike price of $1.21 is $.02 per Euro. In addition, there's a bank in Germany offering a June Forward contract for $1.24 per Euro, and a bank in NY is willing to make him a loan (in dollars) for 25%. Show how Sven can make a killing with very little effort. what's the minimum he'll earn for each 150,000 Call Option contract he purchases? How and when will he make more than this minimum amount? Explain