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consider the following spot quotations: 1 EUR = 1 GPB = EUR 1.35 USD 1.25 1.60 Are the quotations in equilibrium? if not, show the
consider the following spot quotations:
1 EUR = | 1 GPB = | |
EUR | 1.35 | |
USD | 1.25 | 1.60 |
Are the quotations in equilibrium? if not, show the steps and calculate how much triangular arbitrage profit can be earned on $ 1,000,000. Also describe what will happen ( which currency will appreciate or depreciate) to move to equilibrium.
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