Question: (Step 2 of triangular arbitrage) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.205 - 1.00 and

(Step 2 of triangular arbitrage) You are a U.S.-based treasurer with $1,000,000 to invest. The dollar-euro exchange rate is quoted as $1.205 - 1.00 and the dollar-pound exchange rate is quoted at $1.185 1.00. If a bank quotes you a cross rate of 1,00 - 1.010, you should Sell Euro 10) to buy GBP (E) Sell USD ($) and buy Euro () Sell GBP (E) and buy USD ($) Sell GBP () and buy Euro ()

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