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Suppose in New York the euro and British pound trade at the following exchange rates: 0.924 $/euro, and $/pound =1.497. In London, the euro equivalent
Suppose in New York the euro and British pound trade at the following exchange rates: 0.924 $/euro, and $/pound =1.497. In London, the euro equivalent rate of the pound is 1.650 euro/pound.
a)Is there an arbitrage opportunity? Explain
b) Calculate the profit to be made on $2,000,000. (show your work to four decimal points)
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