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Calculate a cross rate and make a conclusion

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Reference no: EM132844088

Question - The following exchange rates are quoted for USD, EUR, and GBP. You can buy or sell at the stated rate, i.e., ignore the bid-ask spread.

Citibank USD1.2223/EUR

Barclay Bank USD1.8410/GBP

Dresdner Bank EUR1.5100/GBP

Assume you have an initial USD1,000,000

Required -

1) Calculate a cross rate and make a conclusion.

2) Divide the above conclusion into two portions. Show steps and calculate the amount of arbitrage profit in USD?

Reference no: EM132844088

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