Answer Happy

Instruction: (1) Preferably use Excel sheet for computations.
(2) DO NOT ROUND off calculation results EXCEPT the FINAL ANSWER
(e.g. if FINAL ANSWER is 69.49, then INPUT 69). (3) Refer to the
table named "CALCULATION".
1. Suppose you have EUR 100,000 and you think there is a
locational arbitrage in the EUR/GBP spot market given quotes of the
three banks. Determine the best EUR gains (if any), otherwise write
0.
2. Suppose you have GBP 100,000 and you think there is a
locational arbitrage in the GBP/USD spot market given quotes of the
three banks. Determine the best GBP gains (if any), otherwise write
0.
3. Suppose you have USD 100,000 and you think there is a
triangular arbitrage in the market given quotes of the three banks.
Determine the best USD gains (if any), otherwise write 0.
4. Suppose you have USD 100,000 and since EUR and GBP deposits
pay higher interest rates, you decide to convert to either EUR or
GBP so you can take advantage of the higher deposit rates. Not
converting the USD and investing at 1% will only yield 1,000 USD
Profit. What is the best dollar profit for a Covered Interest Rate
Arbitrage trade using 1yr forwards?