Engage in arbitrage with respect to the pound sterling

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Reference no: EM131082934

Upon hearing that crude oil prices were going to rise, the traders at Barclays started to engage in "arbitrage" with respect to the pound sterling.

1-Describe the arbitrage process that Barclays put into play.

2-Explain the risk that Barclays is exposed to as it continues to buy and sell pounds. In other words, instead of making profits, how could Barclays lose money on these trades?

Reference no: EM131082934

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