1. Use the following information to answer the following 3questions

Direct Market forC$/INR                           Bids                  asks

Deutsche Bank’squote:                        C$.0855/INR    C$.0865/INR

Barclays’quote:                                   C$.0857/INR    C$.0864/INR

CSFB’squote:                                       C$.0860/INR     C$.0871/INR

Markets for INR/$ andC$/$

                                                      dollarbids        dollarasks        CADbids            CADasks

Deutsche Bank’squote:                  INR13.0/$        INR13.3/$        $.865/C$          $.871/C$   

Barclays’quote:                             INR13.1/$        INR13.5/$        $.866/C$          $.872/C$

CSFB’squote:                                 INR13.2/$        INR13.35/$      $.867/C$          $.875/C$

1. What is the best direct C$/INR ask price? Compute the bestindirect C$/INR bid price.    (These are theclockwise numbers)

2. What is the best direct C$/INR bid?  Compute the bestindirect C$/INR ask price. (These are the counter-clockwisenumbers)

3. Determine if there is a triangular arbitrage opportunity. (Lookclockwise and counter-clockwise) If there is an arbitrageopportunity, do it!  How much risk-free arbitrage profitis there if you start with $1,000,000 and make one trip around thetriangle?