Suppose you observe the following spot exchange rates:

S(/$) = 0.67, S($/) = 2.00, S(/) = 0.80

a.Show if there exists a triangular arbitrage. If there exists an arbitrage, what is your strategy for a dollar profit (Start from selling the dollars and end with buying the dollars)?(4 points)

b.Start with $100,000, calculate the dollar profit. (2 points)