1. Assume the following information: Exchange rate of Singapore dollar in USD = 0.32 USD/SGD Exchange rate of pound in USD = 1.46 USD/GBP Exchange rate of pound in Singapore dollars = 4.9 SGD/GBP If you have 1 million USD to conduct one cycle of triangular arbitrage, what will be your profit?
2. Assume the following information: 1-year interest rate on U.S. dollars = 11.5% 1-year interest rate on Singapore dollars = 9.7% Spot rate of Singapore dollar = 0.48 USD/SGD 1-year forward premium on Singapore dollars = 3.64% Given this information, how much profit can be made with covered interest arbitrage, by borrowing 1 million USD?