S ( / ) = S ($ / ) / S ( $ / )

Suppose

• Citibanks quote: $1.5445 1.5460 /
• Barclays quote: $1.9443 1.9453 /
• Dresdners quote: 1.2789 1.2799 /

• Cross-rate between Citibank and Barclay should be 1.2589 / , compared to the actual Dresdner quote of 1.2789 / .

Is triangular arbitrage possible if an investor starts with 1 million and follows the following two strategies independently?

• (a) Euros to Dollars to Pounds to Euros.
• (b) Euros to Pounds to Dollars to Euros.

Are there are arbitrage gains or losses in either case? If yes, how much?