Subject 3: Exchange Rates and International Finance (35%) Manolis who has graduated with an MBA from HOU is working as a financial trader at HB bank. The HB bank is quoting the following exchange rates against the US dollar ($) for the euro () and the Swiss franc (CHF): ,-08 and EeHF/ 12. Manolis observes that the HBE bank is currently quoting the exchange rate between the euro and the Swiss franc as Ee/CHr 0.7. a) Ignoring transactions costs, does Manolis have an arbitrage opportunity based on these quotes? [Mark: 0.5] b) If he has 5,000,000 US dollars, what steps would he take to make an arbitrage profit and how would he profit? Comment on your findings. [Mark: 1.0 c) What happens if he initially decides to sell US dollars for euros? [Mark: 1.0] d) What Ee/cHF eliminates arbitrage opportunities? Comment on your findings. [Mark: 1.0] ate arguments 40%