The quotes for S, f and  from three different financial institutions are as follows: Assume you have US Sl million to invest. CIBC $0.6500/ RBC EO.8130/$ TD 1.9300/E (1) What is the implied cross rate? (2) Is there an arbitrage opportunity? Why? (3) If there is an arbitrage opportunity, calculate the arbitrage profit and show your calculation steps. (4) Can this opportunity be sustained over a long term? Why or Why not? 

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Suppose that the annual interest rate is 5.0% in the United States and 3.5\% in Germany, and that the spot exchange rate is $1.12/ and the forward exchange rate, with one-year maturity (i.e. 360 days), is $1.16/. Assume that an arbitrager can borrow up to $1,000,000 or 892,857 (which is the equivalent of $1,000,000 at the spot exchange rate of $1.12/), show arbitrage profit from a German investor point of view. (1) Is there an arbitrage opportunity? Explain (2) If yes, what is the profit? Show your calculations. (3) Suppose the expected inflation rate in United States is 7% while in Germany is 4.5%. Calculate the real exchange rate q and discuss how competitiveness of Germany will change relative to U.S. Suppose that the annual interest rate is 5.0% in the United States and 3.5\% in Germany, and that the spot exchange rate is $1.12/ and the forward exchange rate, with one-year maturity (i.e. 360 days), is $1.16/. Assume that an arbitrager can borrow up to $1,000,000 or 892,857 (which is the equivalent of $1,000,000 at the spot exchange rate of $1.12/), show arbitrage profit from a German investor point of view. (1) Is there an arbitrage opportunity? Explain (2) If yes, what is the profit? Show your calculations. (3) Suppose the expected inflation rate in United States is 7% while in Germany is 4.5%. Calculate the real exchange rate q and discuss how competitiveness of Germany will change relative to U.S