The cross rate implied by the interbank market is 85.76/85.80
In triangular arbitrage, we are not supposed to use implied quote in calculation. Then how come the answer is C?
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The question didn’t ask us to carry out the Arbitrage using an amount. They simply asked us to identify the technique and the amount of arbitrage profit the trader would make. Had they asked us to carry out the arbitrage, we’d have used an amount to do so……there, we wouldn’t have used directly the interbank quote, since the same is an implied one ( we calculated it……not directly available). So, we’d sell in the interbank market, getting one currency and then selling the other one to arrive at the profit.