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Suppose you specialize in cross-rate arbitrage, and you notice the following quotes: Pound sterling/ dollar = 0.6484/$. euro/ dollar = 1.081/$ Suppose a bank offers

Suppose you specialize in cross-rate arbitrage, and you notice the following quotes:

Pound sterling/ dollar = 0.6484/$.

euro/ dollar = 1.081/$

Suppose a bank offers the following quote: euro / Pound sterling = 1.665/.

Do you have an arbitrage opportunity based on these quotes? If you do, what steps would

you take to make an arbitrage profit, and by how much would you profit if you have

$1,000,000 available for this purpose?

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