Suppose you observe the following rates in a market. $0.80 1.0 euros $1.50 1.00 pounds ....

 

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Suppose you observe the following rates in a market. $0.80 1.0 euros $1.50 1.00 pounds . 0.55 pound = 1.00 euro If you have $1 million, you will get arbitrage profits by buying a currency with $1 million, then buying another currency with the currency you bought, and lastly buying dollars with the currency you bought. The arbitrage profit with the operation will be write your answe thousand dollars (rounded to 0 decimal places). Suppose you observe the following rates in a market. $0.80 1.0 euros $1.50 1.00 pounds . 0.55 pound = 1.00 euro If you have $1 million, you will get arbitrage profits by buying a currency with $1 million, then buying another currency with the currency you bought, and lastly buying dollars with the currency you bought. The arbitrage profit with the operation will be write your answe thousand dollars (rounded to 0 decimal places).

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To determine the arbitrage profit we need to look for opportunities where the ex... View the full answer