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(Step 1 of triangular arbitrage) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.205 - 1.00 and

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(Step 1 of triangular arbitrage) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.205 - 1.00 and the dollar-pound exchange rate is quoted at $1.185 1.00. It a bank quotes you a cross rate of E1.00 - 1.010, the intrinsic value for the cross rate is 1.00 - 1.5352 1,00 - 0.9834 1.00 - 1.4279 E1.00 - 1.0169 1.001.1733

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