Based on the following information, is there an arbitrage opportunity? If yes, what is the arbitrage profit in terms of a percentage?

Bank A: $1.6=1

Bank B: $1.8=1

Select one:

a.

No.

b.

Yes, 12.9%.

c.

Yes, 12.5%.

d.

Yes, 13.3%

Can you please provide the explanation, formula and correct answer for the problem above?

I need specific step by step on how to solve the problem. The answer is C)12.5% can you please explain how/why?