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How would you exploit the arbitrage opportunity

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Reference no: EM133113478

Question - You are an FX trader of Banco Santander and observe the following quotes for British Pounds (GBP), U.S. dollars (USD), and Mexican pesos (MXN):

USD 1.32/GBP

MXN 24.88/GBP

MXN 18.80/USD

Required -

1. Compare the implied quote of MXN/GBP with the direct quote. Is there an arbitrage opportunity?

2. How would you exploit the arbitrage opportunity? Assume you have MXN 1.000.000.

Reference no: EM133113478

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