The Australian dollar and U.S. dollar S(USD/ AUD) spot exchange rate is 0.9875 . The Singapore dollar and U.S. dollar S(SGD/ USD) spot exchange rate is 1.2238. If market is quoting the Singapore dollar and Australian dollar S(SGD/AUD) spot exchange rate at 1.2425 , determine if there is any triangular arbitrage. How much can you profit in US dollar ) if you can borrow up to $1,000,000 without any transaction cost.

Be sure to answer the following questions : 1. What is the implied cross-exchange rate between SGD and AUD, S(SGD/AUD) 2. If there is an arbitrage opportunity , state clearly each step necessary to capture the profit. 3. How much is the arbitrage profit in US dollar ?