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1) A company is working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London

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1) A company is working out of Vienna with operations in New York simultaneously calls Citibank in New York City and Barclays in London. The banks give the following quotes on the euro simultaneously. (3 marks) Citibank NYC Barclays London $1.2828–297€ $1.2824-25/€ Using $2 million or its euro equivalent, determine whether the corporate treasury could make geographic arbitrage profit with the two different exchange rate quotes.

2.You are given the following information: Quantity of imports Foreign currency price of imports Exchange rate (d/f) 20 1.50 Calculate the foreign currency and domestic currency values of imports. What will happen if the exchange rate falls to 1.20, assuming that the value of the elasticity of demand for imports is -0.1? (2.5 marks)