Assuming no transaction costs or taxes exist, do covered arbitrage profits exist in this situation? Describe the flows. (b) Suppose now that transaction costs in the foreign exchange market equal...

Assuming no transaction costs or taxes exist, do covered arbitrage profits exist in this situation? Describe the flows. (b) Suppose now that transaction costs in the foreign exchange market equal 0.25% per transaction. Do unexploited covered arbitrage profit opportunities still exist?