Which of the following is true given the following quotes for foreign exchange: 1.68-1.70$/£; 1.43-1.45$/€; 1.13-1.15€/£

Question

Quizplus · Accepted Answer

Triangular arbitrage is possible when there is a discrepancy in the exchange rates between three currencies. In this case, we can calculate the cross rate between pounds and euros by dividing the pound-dollar exchange rate by the euro-dollar exchange rate: 
1.68/1.45 = 1.155.
The actual exchange rate for pounds and euros is given as 1.13-1.15€/£, which falls within the range of our cross rate calculation. This suggests that there is an opportunity for triangular arbitrage by exchanging pounds for dollars, then dollars for euros, and finally euros back to pounds, to make a profit. Therefore, the correct answer is C, which states that triangular arbitrage is possible and involves exchanging pounds for dollars.

Which of the Following Is True Given the Following Quotes