Suppose the spot exchange rate between the U$.$S$.$ dollar and the Brazilian real is

$E_{BR\frac{L}{U}SD}=5,$ and spot rate between the U$.$S$.$ dollar and the Mexican peso is

$E_{Mx\frac{N}{U}SD}=17.$

$($a$)$ Suppose that $E_{Mx\frac{N}{B}RL}=3.$ If you hold U$.$S$.$ dollars, explain how you can exploit

an arbitrage opportunity? To simplify, suppose you have $$100$ USD, explain how

you can convert this into $$113\mathrm{.}33$ USD with zero risk, using the given exchange

rates.

$($b$)$ In the absence of arbitrage opportunities, what must be the spot exchange rate

between the Mexican peso and the Brazilian real: $E_{Mx\frac{N}{B}RL}?$