Suppose IBM has a liability of 1,000,000, payable in three months. The company wants to hedge foreign exchange risk using forward contracts. The current spot rate for the is $1.2415/, and the three-month forward rate is $1.2492/. i. What forward position should IBM enter into? ii. Suppose the spot exchange rate in three months' time is either S1.2342/E or $1.2547/. Using this example, demonstrate how the forward contract in part i helps IBM eliminates foreign exchange risk exposure You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.50-1.00 and the dollar-pound exchange rate is quoted at $2.00 1.00. If a bank quotes you a cross rate of 1.00 1.25, is there an arbitrage opportunity? If so, how much money would you make? Show all workings