QUESTION TWO Assume the following spot exchange rates exist today: USD/ZAR 14.5314 ZAR/BWP 3.6500 However, USD is actively trading at BWP12.5000 in the foreign exchange markets. a) Calculate i) USDBWP cross rate (4 marks ii) Based on these exchange rates and assuming no transaction costs, illustrate how triangular arbitrage can be used to earn a riskless profit. 19 marks b) Clearly highlight causes of arbitrage opportunities in the foreign exchange markets. [12 marks] Total: 25 marks