Here are the steps to arbitrage this opportunity: 1. Exchange $600 for 708,976 won (KRW) at the 1:1,176 exchange rate 2. Buy the cell phone in South Korea for 600,000 won 3. Ship the phone to the US for $5 4. Sell the phone in the US for $600 5. Exchange the remaining 108,976 won for $92 at the 1:1,176 rate 6. Profit of $92 - $5 = $87 7. Percent profit is $87/$600 = 14.5% So you should buy the cell phone in South Korea and sell it in the US. You will make a