Find the no-arbitrage cross exchange rate.The dollar-euro exchange rate is quoted as $1.60 = €1.00 and the dollar-pound exchange rate is quoted at $2.00 = £1.00.

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To find the no-arbitrage cross exchange rate between the euro and the pound, we first convert each currency to a common base, in this case, the dollar. Given $1.60 = €1.00, it means €1.00 = $1.60. Similarly, given $2.00 = £1.00, it means £1.00 = $2.00. To find how many euros are equivalent to one pound, we divide the dollar-pound rate by the dollar-euro rate: $2.00 / $1.60 = €1.25. Therefore, the no-arbitrage cross exchange rate is €1.25/£1.00.

Find the No-Arbitrage Cross Exchange Rate