Suppose you observe with the following quotes:

London: $1=1\mathrm{.}27$$$.$

New York: $1=1\mathrm{.}08$$

Amsterdam: $1=1\mathrm{.}16$

Required:

$1.$ Compute the implied cross rate. $($Take the first two decimals$)$

$2.$ Compare the implied cross rate against the quoted cross right in Amsterdam.

$3.$ Determine if there is a triangular arbitrage opportunity.

$4.$ Identify the sequence of transaction of an American investor.

$5.$ Calculate your dollar profit if you have $$1,000,000.$

$6.$ What happens if you engage in transaction in the opposite direction?

$7.$ Identify the sequence of transaction if you were a British investor with $500,000$ to start with. Calculate your pound profit.

$8.$ Identify the sequence of transaction if you were a French investor with $200,000$ to start with. Calculate your euro profit.