Question: Rob has U.S. dollars ($) amounting to $1,000,000, and is provided with the following quotes: Bank A: Euro/US dollar = 0.8518/$ Bank A: British pound

Rob has U.S. dollars ($) amounting to $1,000,000, and is provided with the following quotes:

Bank A: Euro/US dollar = 0.8518/$

Bank A: British pound /US dollar = 0.7548/$

Bank B: British pound/Euro = 0.8863/

2.1 Does an arbitrage opportunity exist based on the quotations of Bank A? Indicate what the correct cross rate should be:

a. 0.8863/

b. 0.8864/

c. 0.8862/

d. 0.8861/

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