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Given the following two sets of quotations by two currency dealers: Dealer A                             &nbs

  1. Given the following two sets of quotations by two currency dealers:

Dealer A                                              Dealer B

     Bid                  Ask                             Bid                    Ask

$1.1284/€         $1.1368/€                     $1.1464/€         $1.1590/€                                 

  1. Show without any calculations whether these two sets of quotations are out of equilibrium to a degree that would lead to an arbitrage opportunity in the absence of any transaction costs beyond the bid/ask spread.
  2. Prove your point by narrating the trading activities that you need to perform and calculating arbitrage profit by starting with a nominal sum of $45 million.
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