Condition is restored after arbitrage activities

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Reference no: EM131825044

The following quotes present an arbitrage opportunity.

Bank A: $1.10=1 euro

Bank B: $1.25 euro= 1 british pounds

Bank C: $1.40= 1 british pound

When the equilibrum condition is restored after arbitrage activities, would the number, 1.25, in Bank B go up or down?

a. Go up

b. Cannot be determined by these numbers.

c. Stay the same

d. Go down.

Reference no: EM131825044

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