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Now suppose the exchange rate between the euro and the dollar in New York is $/€...

Now suppose the exchange rate between the euro and the dollar in New York is $/€ = $1.15/€; the exchange rate between the dollar and the yen is ¥/$ = ¥108/$; the exchange rate between the yen and the euro is 126.50.

1)Do you see an arbitrage opportunity here? Briefly explain.

2)If there is and your home currency is the US dollar how much profit can you make if you engage $1,000,000 in an arbitrage transaction?

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