Question: Problem 2 (7 points) You observe the following quotes for the pound () and the euro (): Bid Ask $1.34/ $1.38/ $1.15/ $1.17/ a. What

Problem 2 (7 points) You observe the following quotes for the

pound () and the euro (): Bid Ask $1.34/ $1.38/ $1.15/ $1.17/

Problem 2 (7 points) You observe the following quotes for the pound () and the euro (): Bid Ask $1.34/ $1.38/ $1.15/ $1.17/ a. What is the implied / cross-quote? (2 points) b. If the actual / is: 0.85 - 0.91, is arbitrage possible? (2 points) c. If there is arbitrage opportunity, what is the profit from triangular arbitrage if you have $1,000,000? (3 points)

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