1. **Problem Statement:** We are given exchange rates: - Rs.134.60 = €1 - 50p = 1.52 marks - 4.8 Francs = $1 - 1.66 marks = $1 We need to find: a) The arbitrary exchange rate between France (Francs) and Kathmandu (Rs). b) The profit if 1000 francs are bought directly and exchanged indirectly given $1 = Rs15.01. 2. **Step a) Find the arbitrary exchange rate between France and Kathmandu:** - First, find the rate between marks and Rs. - From 50p = 1.52 marks, 1p = $\frac{1.52}{50} = 0.0304$ marks. - Since Rs.134.60 = €1 and 50p = 1.52 marks, we need to connect Rs and marks via euros and pounds. However, the problem seems to mix currencies; let's clarify the chain: - Rs to €: Rs.134.60 = €1 - p (pence) to marks: 50p = 1.52 marks - marks to $: 1.66 marks = $1 - Francs to $: 4.8 Francs = $1 We want Francs to Rs. Let's convert Rs to $ via € and marks: - Rs to €: Rs.134.60 = €1 - € to p: 1€ = 100p (assuming 1 euro = 100 pence for simplicity) - p to marks: 50p = 1.52 marks => 1p = 0.0304 marks => 100p = 3.04 marks - So, 1€ = 3.04 marks Now, marks to $: 1.66 marks = $1 => 1 mark = $\frac{1}{1.66} = 0.6024$ dollars Therefore, 1€ = 3.04 marks = 3.04 * 0.6024 = 1.831 dollars Rs to $: - Rs.134.60 = €1 = $1.831 - So, 1 Rs = $\frac{1.831}{134.60} = 0.0136$ dollars Francs to $: 4.8 Francs = $1 => 1 Franc = $\frac{1}{4.8} = 0.2083$ dollars Now, to find Francs to Rs: - 1 Franc = 0.2083 dollars - 1 dollar = $\frac{1}{0.0136} = 73.53$ Rs (inverse of Rs to $) So, 1 Franc = 0.2083 * 73.53 = 15.32 Rs **Answer a):** The arbitrary exchange rate between France and Kathmandu is Rs.15.32 = 1 Franc. 3. **Step b) Find the profit if 1000 francs are bought directly and exchanged indirectly given $1 = Rs15.01:** - Direct purchase cost of 1000 Francs in Rs: - From above, 1 Franc = Rs15.32 - So, 1000 Francs = 1000 * 15.32 = Rs15320 - Indirect exchange: - 1000 Francs = $\frac{1000}{4.8} = 208.33$ dollars - Convert dollars to Rs at $1 = Rs15.01 - Rs from indirect = 208.33 * 15.01 = Rs3127.5 - Profit = Direct cost - Indirect cost = 15320 - 3127.5 = Rs12192.5 **Answer b):** Profit by indirect exchange is Rs12192.5.