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(ii) Suppose that in New York, the currency pair of the Euro and British pound is trading at the following exchange rates: 1.275 $/ and
(ii) Suppose that in New York, the currency pair of the Euro and British pound is trading at the following exchange rates: 1.275 $/ and at $/ = 1.412. Meanwhile, in London, the equivalent rate of the pound is 1.198 /.
(a) Explain whether there is an arbitrage opportunity.
b) Calculate the profit to be made on $1,000,000.
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