The following exchange rates are provided below.

Inflation Rate in Sweden

2.93%

Chinese Yuan to Swiss Franc

7.32 CNY/CHF

Thai Baht to Euro

35.5 THB/EUR

Singapore Dollar to Swiss Franc

1.48 SGD/CHF

Singapore Dollar to Euro

1.60 SGD/EUR

1. Determine the implied CNY/THB cross rate.(3 POINTS)
2. Suppose that the THB/CNY exchange rate was3.95 THB/CNY. Explain in words how you would take advantage of this arbitrage opportunity.(2 POINTS)
3. How would the market react to counteract the arbitrage? Explain.(1 POINTS)
4. Suppose that the THB/CNY exchange rate was3.95 THB/CNYand assume you have 5000 THB (note: If you were unable to solve Part A, assume that the cross-rate exchange rate is 0.21 CNY/THB).What is your profit in THB?(2 POINTS)