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You observe the following quotes for the pound()and the New Zealand dollar (NZ$): Bid Ask $1.61/ $1.62/ $0.55/NZ$ $0.56/NZ$ What is the implied NZ$/ cross-quote?

You observe the following quotes for the pound()and the New Zealand dollar (NZ$):

Bid Ask

$1.61/ $1.62/

$0.55/NZ$ $0.56/NZ$

  • What is the implied NZ$/ cross-quote?
  • If the actual NZ$/ is: 2.95 2.96, is arbitrage possible?
  • If yes to above, what is the profit from triangular arbitrage if you have $1,000,000?

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