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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.
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