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A hedge fund manager has $1,000,000 to invest in the foreign currency market. The dollar-euro exchange rate is quoted as $1.60/ € and the dollar-pound exchange rate is quoted at $2.00/£. If a bank quotes a cross rate of €1.20/£, how much money can he make (in terms of dollars) via triangular arbitrage? show work

40,000

41,667

1,160,000

Based on the information in the previous question, which of the following will occur as the arbitrage opportunity is eliminated?

The euro will appreciate against the dollar

The pound will appreciate against the dollar.

The pound will depreciate against the euro.

None of the above.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92070351

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